Pros and Cons
Imagine if you will the completely autonomous ipod. It can be done, and it works just fine.
Plug in your ipod, change the preference to manually manage all of your music. Drag everything from your itunes library to your ipod.
Your library now exists independantly in both places. They aren't syncronized anymore at all. Which has some pros and some cons:
Pro:
1) You can delete every song from your machine, and they will remain on your ipod...allowing you to have music that your computer hard drive doesn't need to hold.
2) Everything that you can do with your iTunes library, you can do with your ipod alone. You can create playlists and smart playlists that only exist on your ipod. And, with newer iPod models, the smart playlists update on the fly...without even plugging back into your machine...so you can have dynamic stuff with you on the go.
3) Don't know how much you care about podcasts, but you can independently manage music vs. podcasts...which means that while iTunes relies on you to move music to your ipod, it will automatically update podcasts...I believe, depending on your iPod that the same holds true for pictures and videos.
Cons:
1) Because the only instance of this music on your hard drive, you are more apt to lose it...for a few reasons...the ipods hard drive, because it is out in the world, tossed into backpacks, accompanying you on bike rides and bungie jumps, etc...is more prone to failure. Also, while your ipod is plugged in, if you click on a song and say delete...it gets deleted, without the standard "Do you want to keep this song or move it to the trash" message...it just goes away...and since it's only on your ipod...it REALLY goes away. Worst yet, iTunes to iPod transmissions only go one direction. Which means if you ever want the songs for any other purpose (new computer, whatever) you have to get some third party software to dig them off.
2) You have to plug it back into your mac to do anything. Say you want a new playlist, or you just bought a new cd...you have to plug it back into the machine to make these changes...I guess this is true even if you're not in Manual mode...but since it no longer updates automatically, this extra step is now very extra.
Having said ALL OF THAT, I live like this. I have a first generation, 5GB ipod and a 1999 iMac with a 10GB hard drive. I can't keep 5GB worth of music on there...so my music only exists on the iPod and the CDs where it came from. I do lose sleep from time to time worrying about the day that my iPod doesn't wake up (for the downloaded music, and some CDs that I've lost) but if you are good about backing up your tracks, this option is one of the overlooked gems of ipod ownership.