My current plan is to get a system I like, then switch my iPod to manual to add movies, audiobooks, etc that I don't store usually in my iTunes library. Then the songs I added via sync will still sync with my itunes library, but I can have content on my ipod that doesn't fit on my computer HD. Do you see any potential problems?
While smartlists function well on a manually managed iPod function, there are some things to consider.
The big thing to keep in mind is that since playcounts and other play data will not sync back to your general library, you will essentially be starting back at ground zero whenever it becomes necessary to restore the iPod. My experience is that this always is a matter of when, not if. If you don't care about this, for example, your iPod can hold all your audio data so these playlists are just for making randomized mix lists, then it may work for you.
In a similar vein, once you switch to manual, you'll lose the ability to manage what goes on and off the iPod via those smartlists. You can, as I do on my daughter's iPod, make smartlists on the iPod just to handle the management aspect. Nothing big, but you have to think your way around the fact that the iPod, as far as iTunes is concerned, becomes a big, black hole where nothing can escape and all the management for what should or shouldn't be on your iPod has to take place in your noggin or via special smartlists on the iPod just for that purpose.
As an example: I have a big, complicated smartlist that fetches all the music that's goes on my daughter's iPod. I use manual management on that iPod since I don't want those playcounts coming back to iTunes or scrobbling to my last.fm account. Since conditions change because we get new music, she decides doesn't want something on there, or she hears something of mine playing that she wants, I'm semi-frequently changing the copy of this smartlist that resides in my iTunes library. What I do to actually keep her iPod current is I drag the iTunes copy of this smartlist onto the iPod and it replaces to out of date version and transfers and
new tracks but it leaves all the old music no longer referenced by the smartlist. To remove that, I created a smartlist
on the iPod that has the condition {Playlist IS NOT "My Daughter's iPod"}. Since the list is created on the iPod, it only ever sees the music on the iPod and shows me everything that needs deleted, a shift select followed by a shift-DELETE and everything is current. The only quirk is that since smartlists are actually identified by a hidden ID (I suspect this may be why things like {Playlist IS Music} break live updating, the iPod's internal Music list is not the same as the library's), you have to update the Playlist rule for the management list each time you replace the content fetching one.
And, this isn't related to the manual management, but you do realize that your playlists FAV & RAND never refresh? The only way different music is winding up on those is if you drop the rating of a song to 3 stars or lower in the case of FAV, or 1 or 2 stars in the case of RAND. Any time you don't include a fairly strict removal rule, e.g. the "Last played IS NOT IN THE LAST X days" the list contents don't change unless you manually clear the contents and let it refill. If you add a "Last Played" rule to those lists they'll behave much better.
It works! You just made my day.