1. Can you live without OSX?
2. How much of a premium are you willing to pay for sleek design?
1) Yes.
2) $0.
Okay so tbh I think I am one of the "ex-Apple converts" you speak of but not entirely.
My Apple product timeline: iPod Nano 1 -> iPod Touch 1 -> iPhone 4 -> 13" MBP
I was impressed by the iPod touch but what really made me an "Apple Fanboy" was the iPhone 4. I was so impressed by it that I decided to get a $1,500 MacBook Pro laptop from them despite the weak internals and I am very happy with it. That's the back story, now on to the relevant stuff.
About 6 months ago I decided it was time to get a desktop... I primarily wanted it for my college programming classes (studying to be a software engineer) and to game on. I immediately decided to check out the iMac's because I figured they would be exceptional, just like all of my previous Apple products so I started researching and looking on forums. 6 months later... I have a much different opinion on desktop computers.
I think you pretty much got it right. The only thing that makes the iMac worth it is if you
1) cant go without OS X
2) wanna pay $$$ for looks and Apple's name
For me, OS X is great but it's not a necessity for me. I can get just as much done on Windows (if not more) than I can on OS X.
As for the price premium for a "sleek" (ie terribad) design; I laugh at this one. The whole AIO concept is just ridiculous to begin with IMO. Why put really hot computer components behind a screen instead of in a box designed to properly cool them? I don't get it, other than
maybe it looks cool? How is that worth sacrificing power and proper cooling... But whatever, to each their own.
And one other thing that tipped me in the other direction (a custom built desktop) was the weak mobile GPU's Apple puts in their "desktops"... Shouldn't desktops have desktop gpu's?

If the 21.5" base model had the GTX680m in it then I might consider it but to get the GTX680m your looking at close to 3 grand which is absolutely absurd for a desktop IMO especially considering it has a mobile GPU
In conclusion, I originally wanted an iMac because I expected it to be exceptional because Apple made it but after doing some research I realized that it was definitely not the desktop for me... I was hoping the 2012 iMac would change everything but from what it sounds like, its only getting worse.
I still love the iPhone though and plan on getting an iPhone 5 ASAP and my next laptop (if I ever need another one) will most likely be another MBP.
Sorry for the really long post but I wanted to tell my story because it seems pretty relevant here.