To address your points in order:
1. No it doesn't play h264. It plays xvid and divx ... which is why I got it. It's my video file type of choice. It works with AC3 sound. It can handle subtitle files. There is an awful lot more divx available on the net than h264.
2. Yep. It's more expensive than an iPod.
3. There are similar battery packs available for the A2. Never needed to use one though. Without the extra battery packs, the video battery life on the A2 if fantastic. A main reason for buying it.
4. The joystick isn't the best control method ever but it's usable. I'd prefer a click wheel though ... no question about it.
5. I never go to a certain point in a song. Can't say thats something that ever crossed my mind.
6. I prefer the UMS (drag and drop type device). I use it on several PC's in different places and the ability to add and remove stuff easily is something I need. The generic mini-USB cabling is handy here as well. The organisation is as good as you make it. It uses a bog standard folder structure. If you can use Windows Explorer, you can use it. It's fine with me. I click on the video icon, it shows me a list of folders. The folders are all the names of films or TV series. Seems reasonable to me?
7. I don't really use ff & rw during songs either. I use it during video where it's OK .... could be better I suppose.
8. It's never made my thumb sore.
9. Indeed it has a larger screen. On plane/train journeys, it's fantastic.
10. Ten hours (video) playback. Another main reason for getting it.
11. The screen is protected. The protection doesn't detract from the picture. It's hard to see in bright sunlight but then so is my wifes iPod and every mobile phone I've ever used. Plus, bright sunlight isn't somewhere I'm likely to be sitting watching video on a portable media player. My unit is a couple of years old and looks mint. Goes in my pocket and I don't use the case. They don't scratch easily and are study pieces of kit.
12. The res is very good, as is the colour palette. Picture on it is excellent. My wife has a video iPod and I know which one I'd prefer to watch (as indeed would she) for any length of time. The iPod is fine for 30 minute TV shows and stuff but I couldn't watch two films in a row on it.
And also, to add a few of my own:
13. You get all the cabling and accessories you need in the box when you but it (Besides the inline remote). No over-priced extras required to connect to TV's etc.
14. I also use it for e-books. The large screen works well for them.
15. The radio comes in handy from time to time.
16. Is can easily be used as a PVR (supplied cables are all you need) - but thats not something I use it for.
17. The sound quality from it is exceptional.
18. There are hacks to allow you to run games on it. Not something I use.
19. Shame I don't live in Korea. You can buy a small add-on box and it operates as mobile TV. No-one broadcasts in that standard over here though.
20. My wife is sitting watching 'jpod' on the big TV downstairs from the A2 as I type. Grabbed off the 'net (just aired in the US or something?), bunged on the player fresh off utorrent .... no messing about. Can't seem to find an Apple friendly version of it having just had a look. If it keeps her happy, I get peace and I'm happy.
The updated version, the A3, looks very nice. The screen alone makes it almost worth me upgrading. I'm holding off for a few firmware updates on the Q5 though. It's expensive, but it looks sweeeeeeeet.
The iPod is smaller.
The audio battery life on the newest model is good.
The click wheel and UI are excellent.
Other than that, I can't think of anything the iPod offers me over the A2. (I don't like iTunes)
It's hourses for courses. I bought the A2 as it best suited what I wanted from a player. I'm happy with it.
My wife has an iPod. Shes happy with it.
You have an iPod. You're happy with it.
Everyone is happy.