It doesn't tear or stutter. 1.5mpbs bitrate is fine on the iPod, 700 is about as high as you get on the N800.
The gapless hasn't been possible so far on the N800, just another "potential" feature that everyone likes to say.
This is another one that you'll eventually run into. I don't feel like thread searching, but with the introduction of MicroB and its better support of javascript, there is problem sites that look for mouse downs and what happens when you try to drag is that the javascript intercepts it and you can no longer drag scroll.
How is AAC proprietary? Nokia, Nintendo, Sony, and Apple use AAC now. That said, I rip in MP3 just to be consistent.