1. Placement of header menu:
My feelings are it would be alot better to have the option of the placement of the menu, I have many friends who are using Moodle and I would say that they are split on the top / bottom placement, I prefer to split them I use the navrbar on the bottom of the header, and I use the custommenu on the top. I use the the custommenu on the top after users login, so its a user navigation tool for me that doesn't take up alot of space.
2. Concerning the simple login:
I have always be a big fan of header space, as I asked you before I don't want the login in the header space, and alot of my friends tend to agree on this subject. They would whether have the space for additional images/logos or links.
I think the login should be in the navbar, it makes sense, it takes up no space, it's always available.
I have about 20 or so of my friends using the flexi theme and so far it's is all thunmbs up.
On a personal note I think a theme like this is a long time coming, it will be a huge hit I think, it addresses the normal user, who I feel is sometimes overlooked by the Moodle developers. Also myself and a few other friends of mine are using moodle as a CMS package like joomal, etc. for businesses and so far it seems to be working OK.
You are doing a GREAT job Rich, and it is appreciated greatly.