To me, audio codecs don't come into play very much although I do agree, a wider range is nicer.. FLAC, I don't have anything that uses it, or will I.. The tradeoff in space vs quality is too great.. ogg.. wouldn't be bad.. perhaps at some point they will release a firmware update (doubtful, I know)
the gapless playback, I could see where that is a major plus.. I'm generally not too concerned with that.. if I were listening to many different songs that flowed into one another, it would be a different matter... to you, that being a quality you seek, I would see why the ipod isn't the top of the list.
superior audio quality... well, I dont think my ear is trained enough to notice the difference between Karma and ipod, personally
docking station with RCA out I did have bundled with my ipod.. so that point is moot.
hmm 50$ cheaper... not a huge deal when I am comparing other items (plus I was able to grab mine with a fairly hefty rebate, so the price was closer to equal).
the rio is smaller, but again this comes to personal preference, I prefer the size of the ipod... just fits more comfortably in my hand.
storage by id3 database... i think ipod does this... longer battery life... as mentioned before, I think if a music player can last a good solid 5 hours then i am content.
the dock does support USB2.0 transfer, as well as firewire... the ethernet, although it would be a neat feature, I have read that many people get annoyed with the way Karma supports it... I think I would be in that group... setting up ethernet with a d-pad like device ... ugh..
--from reading your post, I would have to agree that the ipod isn't for you... but that is maily because there are alternatives that meet more criteria that you listed.. to me, the only things the ipod doesn't support I really see no need to have... (well, other than gapless playback.. that would be a nice option, but nothing essential)
btw, i echo the sentiments that being able to play WAV and WMA is rather silly.... I really dislike both of those formats, but at least WAV has its place.