1. I get the "Who's watching" screen, no buttons on my remote do anything. So I'm forced to login remotely. I don't ever want to touch a keyboard or mouse when I'm using Media Center on my TV. When I finally do click a profile, I get "Something's not right, try that last step again." I understand that Netflix introduced profiles recently...at least if the arrows and enter button worked, it would not represent a road block.
A. The "Who's watching" screen is Netflix' web page. Just as you can't use your remote to control a webpage loaded within Theater View, so it is with the Netflix page.
2. My instant queue never reloads when I want it to and I don't see a way to force a reload.
A. The Netflix Queue only reloads upon MC (including server, I think) being restarted. PITA if you ask me, but there you go.
3. Search remembers my query twice. I can go to audio or other sections twice before it is lost. The first time, the query is lost but the results stay. The second time, both are lost.
Haven't used the search option too much since Netflix dumped most of their API. Tend to use the app or the website to add things to my queue, then watch.
4. The checkmark for shows appears after they have merely been started, not even close to finished.
A. Yup.
5. Playback often becomes sluggish and I have to stop and start the show or movie, usually after about 5 - 30 minutes of playback. I don't know if my system is not powerful enough or what else might be causing this but I have no problem playing other high definition content. The video gets way behind the audio and the frame rate drastically decreases.
A. I find this is a HD thing. If I turn HD off on the netflix OSD the playback resumes fine.
6. All actions within Netflix are plagued by a 1-4 second delay. Hit stop, it takes this long before anything responds.
A. Again, I think this has more to do with the fact that MC is acting as a kind of go between between yourself and Netflix, as opposed to controlling it "in house".
Overall, in answer to your question about Netflix integration being so bad, I'd say the best place to start asking questions would be Netflix themselves, who are no longer supporting their API for "unauthorised" developers.
Personally, I wouldn't mind MC reverting to the netflix website providing it was still controlled by remote.