I'm from the MS Tablet PC user camp, and many of the things you say here are already possible through what you have today on this thing. Through a free Experience Pack, you get a neat little program called Media Transfer, that can Download, schedule downloads of media files, and even stream them if you want from your desktop PC. And in a very friendly Tablet UI too. Seems they used some experience from the Medie Center Edition with this program, and it works like a charm. I know it's not iTunes :-) Handwriting reco became really good with SP2 (SP2 was a big advance forward for the tablet system) so now I can write big blocks of text without editing. For my handwriting, it's over 99% right, and that's without changing how I usually write.
I would love competition in this area as that would push the development further than ever before, and is only good for us costumers in the end. But really, the MS tablet system is pretty solid as is, and Vista is going to be an other leap forward for tablet users. Apple needs to get things moving fast if they are to catch up. (Imo the apple OS is more "pen frienldy" out of the box, so it seems like a perfect OS to move over to the tablet interface)
Can Apple save the Tablet?