1 - Totally agree, non-reference 4850s are the best way to go, and the only way to go for serious overclockers..
2 - I haven't heard much grumbling about 48xx cards since they launched, and the 5xxx seems to be ironed out since 10.3/4, as far as those somewhat rare lines/ grey-green screesn/black square issues seem to have tapered off significantly in the last few months.
The 5xxx are not notorious for driver issues, but users who haven't properly followed driver protocol (uninstall + driver sweeper on old drivers) in swapping out GPUS seem to be 99% of the complainents when it comes to "driver issues". Installing nvidia drivers over ATI doesn't seem to be all that problematic, but the same cannot be say for installing ATI over nvidia. Make of that what you may.
Don't be fooled by the surface appearance of mass problems. User error is, imo, without a doubt the single largest source of these issues. Who to blame? ATI for not being able to install over legacy Nvidia drivers? Nvidia drivers for blocking/confusing ATI installs? The user who doesn't even really know what a driver is for, or why newer ones are generally more desirable than the ones that come with the card? Lots of possible reasons, but the end result is that one goes looking for "proof" by anecdotal observance, it is easy to form an opinion based on surface appearance, not root causes.
Since ATI cards have their own onboard sound, they don't require the SPDIF cable that Nvidia products require for full HDMI through the video card. The realtek drivers are a necessity as they are for your Motherboard, not your video card. Regardless of GPU, you would need those drivers for the onboard/GPU HDMI.
I have been a long time user of 4XXX GPUs and a fairly recent user of 5XXX GPUs. I have had zero issues using with Win7 (X64 Pro and Ult) and Linux (Unbuntu). Heat can be a problem, but from the general sense that if you OC you really need an overall system that supports OC (big, room, lots o' fans/airflow, solid PSU, etc). If you cram one of the higher end GPUs into a cramped case and then crank the GPU to max, you are going to have heat issues.
As far as user error in installing drivers goes I am very likely to make some of those errors myself. I don't feel that I understand enough about computers to be confident about doing everthing right.
In particular, I don't really understand the audio functions involved on video cards like the HD 5000s. Is there any use for the HD audio functions of a 5750 or 5770 for example if one already has integrated HD audio in the form of Realtek ALC887? Is the Realtek device capable of decoding Dolby True HD or DTS Master Audio? Can True HD signals coming from a Blu-Ray disk be decoded/decompressed, converted to analog, and put out on the Realtek analog 7.1 channel computer speaker outputs? If an HD 5750 card is used can one still funnel the sound through these analog speaker outputs that are associated with the integrated Realtek device? If not, then must one use an A/V receiver, and must it be one with HDMI inputs? The 5750 has no optical digital outputs so how can one get an audio signal from that card except on HDMI output? Can the audio signal from a Blu-Ray disk be separately directed to the Realtek audio device while the video signal is processed by the video card? If so, then the HD audio function of the card is useless in this case?
I think it would be nice to have home theater PC function, even though I have an ordinary home theater set up in another area of the house. But, even though I understand how to set up an HT with a 7.1 channel A/V receiver and an HDTV, setting up HT using a PC seems to involve a somewhat different knowledge base.