A little late here, but I figured I'd add the note that the 17.5-45 lens you mention is consistently ranked as the worst Oly lens, along with the 14-45mm (which I had on an E-330 for years). My friend who got the E-410 with the smaller 14-42mm let me borrow it, and the difference in sharpness and rendering was just night and day, at any focal length and aperture. So in comparing your E-410 with any other given camera, the 17.5-45 is probably making the 410 look worse than it is. The 14-42 just seems like a no-brainer to me, unbelievably small for a DSLR lens and often available used for well under $100.
As for me, I'm sticking with my Pentax K-x (small and light enough, I guess) until that beautiful Samsung NX200 comes down in price... tiny, with some superb pancakes available, and 20mp of APS-C goodness with the same rendering characteristics as the K20D sensor I loved but with several years of tech development in the interim... Since no one really notices Samsung's superb mirrorless offerings, after a couple months their prices come WAY down, just in time for me to hit the road for the summer.