I'm glad you're enjoying it! I haven't been able to play with it as much because I don't have any way to get programming onto the box yet (can't get over-the-air signal in the basement where my TV is located for the next week).

I thought I might address some of the points you had:

-wow! I didn't know that they had changed the way programs got deleted! That's fantastic! People have been asking for undelete for years!
-about the movie rentals, I know this doesn't help with the selection problems, but you might want to get on the mailing list to be notified about the 99 cent movie rentals.
-as a slight work-around for the light-up remote, when you first pick it up you could just hit the enter key first, which generally doesn't do anything in most normal Tivo operating modes, and is pretty easy to find in the dark.

I cannot wait to use this thing fully. It's an impressive box, and I love the new remote (I've always loved the peanuts, and this one improves on the previous design). I agree with your complaints, and the price is the one major obstacle. There's rumors about an "S3 light," but I can't really think of what features they could take out to bring the price down as far as they need to. Most people seem to expect the thing to be under $300, and I can't imagine how they could remove $300 worth of hardware.