An iPod with "full screen" would be cool indeed. I posted a nice photoshop work of me in this formus a few week ago by the way.
I agree for the fingerprint issue. Although the iPod has had a wheel input from the start, it's not said this design element has to be kept in the full screen model. By the way, as a mechanical device, the actual clickwheel takes some place as you have to be able to press it inwards. You could use these few milimeters for a thicker battery instead. Think of alternative input methods that don't ruin the display with finger prints: make touchable surfaces around the screen (like another mp3 player out there... I think it's iRiver...). So you would move your fingertip below the screen to scroll inside a movie, right of the screen to adjust volume. Above the screen would be for pause/play etc... you get the idea. When using the device for playing audio, the whole length of the device could serve for scrolling.
Simply putting the clickwheel on the back of the device might work too. Noone really needs to actually look on the labels of the clickwheel, right? This solution would also retain that tactile sensation given by a clickwheel.
Remember that patent where having an apple laptop on a desk and whacking the desk makes the laptop scroll to the next page? Wouldn't it be nice to slap the iPod on order to perform actions? Something like: Slap once for pause/play, twice for menu, twist to the left for << and to the right for >>, etx. You could even shake the iPod like in the TV ads and it plays a song that matches your shaking speed. I'd love that. That would be tough for the hard drive though making flash memory necessary.
But to stay realistic, didn't apple introduce the iPod remote? That would be an easy method for user input although implying you need two hands, one or holding the iPod and one for controling it. But i can imagine holding the device in my hands when in a train and having the remote in a pocket or hanging on the earphones. If apple really has a true Video iPod in development, I think the clickwheel will be replaced by some more common controls (buttons, trackpad) on the device itself and a more comfortable remote.
Now for DVD-Ripping out of the box. Why not? I mean, iTunes ripps copyrighted CDs, why not do the same for DVDs? I'd love to have all my movies and songs on a single device. The Core Duo Macs should handle converting MPEG2 into h2.64 quie nicely since that's mostly CPU-work and the Core Duo performed well for audio encoding already.