They note that the Theora/Vorbis has not seen commercial distribution...

This is incorrect. Vorbis has shipped tens of millions of units in products by organizations such as, well, Microsoft, to pick an example well known as being uninteresting to patent trolls.

Theora has been in a few games, and other commercial products, but hasn't had the same exposure.

• Record and encode MP3s from any source (internal radio tuner or line-in). [I have been told that recording to OGG is a possible future firmware update.]

The MP3 encoder for the Neuros' TI chip took at least three expert-engineer-years to write; it may have been six or nine.
We'd need to clone Monty repeatedly to get a Vorbis encoder working on the device in a timely fashion; there are also other things to do, like producing bugfix releases, some low-bitrate tuning to make sure vorbis is solidly above codecs with SBR (spectral band replication). Then there's Theora, OggFile, and Vorbis II. Not guaranteed in that order.

Nathan Sharfi
Webmaster, Xiph.Org