Welcome to full capacity and the tasks of building playlists and manually managing your music. I've done this from the start and don't find it cumbersome at all. Kind of enjoy it.
While this method does show you what's on your iPod, I find it easier to just make a playlist on iTunes of all the songs you want on your iPod, and sync this playlist with the iPod. Manipulating songs on the playlist is, IMO, much easier than dragging songs in and out of the iPod every time you want to swap songs. Plus, this way, if you ever have to restore your iPod, you have a record in iTunes of which songs you had on it, and can have them back on your iPod with a single click.