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So I'm guessing that having the controls on the headphones implies that you can't just swap in any old pair of (likely superior quality) headphones?

There is a separately purchasable dongle that has the controls and lets you plug in any headphones you like.

People who want superior quality shouldn't be buying an iPod shuffle. It's a low-end MP3 player with a very specific set of design limitations.

Apple has an entirely line of MP3 players, some of which aren't perfect for would-be audiophiles.

Interesting point, but ultimately a non sequitur with the OPs question.