I realise this is a very old post, but I was having this problem myself and came across this thread while googling for a solution - it wasn't of help but never mind
However, this morning I accidentally discovered the solution and thought I'd share in case anyone was still struggling - while the artist list will always be falsely populated with compilation artists (which, when, like me, you have a digital copy of all 73 Now! That's What I Call Music albums, fully correctly tagged, is kinda bad), however, if you turn it to the side and use coverflow to browse, you'll notice only artists who have albums that aren't compilations have got album entries - and if you have the Album Artist tagged properly, it'll group the compilations under that Album artist too (even if it's Various).
So! Not the best, but better than nothing