I hate the Windows 7 taskbar, always have and always will.
Part of the problem is that you don't understand how it works, which is clear from the many incorrect things you've said about it.
Pinned applications make no sense to me - you want more than one Explorer window open? Clicking the icon minimizes the one that's open. Want to open a second IE window? Clicking "E" again just minimizes IE. Senseless.
Well, once the program is running, there's nothing else it should do; the taskbar is a window switcher for running programs. If you want to open a second IE window that way, right-click the pinned icon and click on the icon in the menu. Before you moan about how difficult this is, consider that 99% of the time, you should be using tabs anyway. If you're talking about Windows Explorer, you could also use Win+E to get a second window. Furthermore, just about all programs that support multiple top-level windows have a "New Window/Document" command on the File menu and also bound to Ctrl+N, including IE, Windows Explorer, Word, Excel, Firefox, etc.
I don't care for jumplists, don't need them. Tried them for a while and hated it.
Do you hate all things that are awesome? Besides providing a Recent Files feature on the taskbar, you can pin documents to jumplists, which is a sort of mini-Favorites feature. Pinning documents to jumplists lets me open them directly from the taskbar without having to navigate to them in Explorer or open the program and search through its Recent Files or use File/Open. I use this all the time with Excel, Notepad++, and PDF-XChange Viewer. Other programs like Outlook and iTunes provide program commands in their jumplist. In 2009, Microsoft finally caught on to the 1980s idea of RiscOS by making icons on the taskbar have a menu and actually do stuff, besides just helping people find open windows.
The default Win7 taskbar is big and takes up more space than it needs to. Default pinned icons are about twice the size of my little quicklaunch icons. I know, I know - you can select "use small icons" but you're still stuck with silly pinned icons. QuickLaunch icons don't move anywhere - pinned icons do.
Pinned icons do not move unless you move them. Same thing for items pinned to jumplists. However, pinned icons do shift as you run programs if you're not using "Always combine, hide labels". When you don't use that option, you get the horrible slabs with ugly, frequently useless truncated text, and that's no way to live. When you do use that option, everything stays where you put it, which is great for muscle memory.
As for the taskbar taking up too much space,
as I've written here before, I used to think it would, too, and I'm sympathetic to that objection. However, once I tried it, it turned out to be a non-issue. Even with my three-row taskbar, I can still get close to 50 lines of text in a Visual Studio text window, and that's plenty. I'm not hindered with any program I use. I expect anyone who already sacrifices some space to an always-visible taskbar can afford to sacrifice more if necessary, unless he's on a really small screen. For me, devoting 11.8% of the vertical space on my 1680x1050 monitor to the taskbar vs 3.8% for one row or 7.8% for two was a great idea, as I have every program I run regularly right in front of me, along with a dozen regularly accessed folder shortcuts, and there has not been a single instance in which I said, "Darn, this document is scrolling now and it wasn't before." I make great use of that extra 8% of screen real estate, and I talked about this a lot more in my earlier message and subsequent discussion.
The Windows 7 taskbar makes sense for your workflow, not mine. Thankfully it was easy to go back to a Vista style taskbar with little hassle.
To each his own, I guess. Prior to Windows 7, I disabled Quick Launch because I was using another program launcher which was far more capable. I'll never understand how anyone who uses more than a handful of programs has ever been able to stand using Windows with the Start Menu, desktop, and later, the Quick Launch bar.