But its not just one codec that's involved, it's multiple. A typical video file will have at least two, one for video, one for audio. If you have alternate audio streams or subtitles, you need a codec for each of those as well. The purpose of a container is to let you take all these streams in their individual codecs and put them together in one file for easy playback. I'll grant you that it's not optimal to have some files with a given extension playable and some not, but with such a multitude of codecs in a single file it's just not possible to condense all that information down to a single file extension.

Depends on the kernel you're running, newer ones (2.6.30, at least) handle the hotswapping on my t61 just fine. I did have the exact same problem under older kernels however.