"has your G-mail or Google Reader gotten any easier to use, or less stressful on your eyes? ... No. Just look at the music listings in new, redesigned iTunes."
If iTunes was OSX-only, it could spray itself all around OSX as a bunch of cute one-screen utilities with clever integration hooks:
1. The App Store would become part of Software Update (which would thus become a general Mac App Store and App Update manager—hopefully buying out AppFresh and giving MacPorts a GUI);
2. Contacts, Bookmarks, Notes, etc., and the transfer of media to the iConsumerElectronics in a friendly, GUIful manner, would all be a part of the iSync utility (yes, that exists—it's the ghetto for synching phones that aren't made by Apple);
3. Podcasts would just be a client program that relies on the same background-downloading daemon that System Updates do, with a modification to read arbitrary feeds, and extract enclosed media files (or torrents!); once downloaded, iSync would just see them and sync them;
4. iTMS would just be a website, which would expose special content types that Safari would know what to do with (audio/x-apple-ringtone = save to the Music/Ringtones folder, etc.);
5. and iTunes would be left to be a music library, consisting in its entirety of Playlists, Genius, and perhaps the Radio (and hooks to send events to Ping, if it likes.)
If iTunes was OSX-only, it wouldn't need to know how to burn CDs; it could just allow you to export a playlist as a folder of MP3s, and then integrate audio-CD burning as an option in the OSX Burn Folder menu.
If iTunes was OSX-only, it wouldn't need to have sections for TV Shows, Movies, Books, Ringtones; those would just be folders on your hard drive, which iTMS (through Safari) would write to, and iSync would read from.
There's a thousand other ways it could be better and slimmer—but, if you'll notice, none of these things could work given the restriction that they have to work on Windows as well.
As far as package management goes, the problem here is that Apple simply does not care. The Mac sysadmin community has been asking for better solutions for years but it's just not a priority for Apple - even App Store updates, which theoretically are more important, have been broken[1] for something like the last 4 major iTunes releases but since it's merely clumsy and doesn't prevent sales it obviously hasn't been as important as a new version of some non-standard window controls.
[1] The process is now: click on Apps. Click on "Get Updates". Click on "Get All Updates". Wait. Dismiss erroneous "The information on this page is outdated and must be refreshed" dialog. Click on Apps. Click on "Get Updates". Click on "Get All Updates". This from a UI powerhouse? The phone almost gets it right except for the gratuitous password nag.
Yes, Windows does have hooks to add functionality—but hooks aren't enough. The reason Apple could remove components from iTunes was that it could, itself, integrate them into all shipping copies of OSX. Apple doesn't decide what drivers and plug-ins get shipped with Windows, so anything they'd install would be third-party and after-the-fact (which is what already happens: e.g. the CD burner driver bundled into the Windows iTunes installer.) You can't slim down Windows iTunes because you have to ship all the programs that make up the functionality of iTunes, whether modularly or monolithically. However, you can slim down OSX iTunes if you just start saying "this will be an OS feature, not an iTunes feature."
Also, on a completely unrelated note:
> The phone almost gets it right except for the gratuitous password nag.
I've always taken that to be a sudo escalation prompt. You don't want your kids picking up your phone and buying things on it.
An integrated iTunes as an all-in-one media file manager linked in to the iTMS is also pretty integral to Apple's desire to drive people to that store - they _want_ people to think about buying more music and movies when they go to update their podcasts or back up their phone. Much like an instant search that serves more ads or an unnecessary password prompt when downloading a free app update, it makes a lot more sense from the perspective of encouraging particular consumer behaviour than from enhancing their productivity or enjoyment.