The top icons on the keyboard (if that is what you are referring to) are functional ( the one on the right allows you to select a different type of keyboard and the one on the left allows you to select a different dictionary for the word correction on the keyboard.

As discussed on the e17 thread, I've been wanting to look at making a different keyboard layout for the NIT that would fit the screens better, but haven't had time. Instruction for how to do that are available in first link you posted (it also has a screenshot showing a keyboard that might fit the screen better in portrait mode). If anyone could give it a shot, that would be great.
Personally, I found e17 to be quite usable on my N810. The size of the keyboard didn't bug me much as I was used to the maemo one that always pops up using even more space (but honestly, I never used either much). E17 has a very light footprint and even though you can't log out as qole mentioned, you can't log out of hildon either as this isn't something you'd expect to do on the N8x0. Besides, to log out, you'd need a login manager which would only use more of your precious RAM. E17, like hildon does allow you to shutdown and restart your device.

E17 still has quite a ways to go, but in generally I prefer it to hildon on my device. It's fast, nice looking, light on the memory, and easy to use.

See the e17 thread for more information.