I found yet another post at the Vertigo Team System blog which once again warns of the dangers of using the vs2005 website approach rather than the Web Application Projects. I do feel like I've been beating a dead horse about this, but I thought this was worth mentioning because it made its recommendations specifically from the Team System point of view. The author listed a reason, which I had never thought of, to choose the WAP over the Website:

it's impossible to check in code analysis rules on Web Site projects, because the code analysis rules are stored entirely on the client!

Overall, I just can't wait for the VS2005 SP1 to come out so that we can put all of this nonsense behind us and avoid having to sell the idea of using a project add-in rather than the VS2005 standard approach. What a mess this all was.