Ok, since you're gung ho on using a Pod live, I'll give you one cautionary note and then respond specifically to one passage.
First, be VERY careful when you're mixing modelers and real amps, live. If you're the only guitarist in the band or your other guitarist is going direct through a modeler as well, then go right ahead and rock out. However there's two things to keep in mind if you're not doing it this way.
One, the two of you will become very difficult to mix. You will be entirely heard through the mains, whereas your buddy will be amplified by a mix of the mains and the sound of his amp coming off the stage. This means that the relative mix of your two sounds is going to vary hugely depending on where you're standing - in front of him, he'll drown you out, anywhere else, you're drowning him out. This is always an issue when micing guitar amps, but it's even worse when one of you is direct because you'll be that much louder in the mains than him, to ensure a good balance from FOH.
Second, I can't count the number of times I've heard myself or anecdotally been told about two-guitar bands, one with a modeler and the other with a tube amp. Without fail, the guy with the modeler might have been miming his parts on stage for all the good it did him. Two modelers cut equally well and generally two tube amps cut equally well, but for some reason modelers just can't cut through a real amp. I really don't know why this is the case, so I can't even begin to provide you a good reason for this, but pretty much every guitarist I know has made this same observation on their own, that you need to go either all modeler or all real.
...Plus, although they produce a very good sound / tone, they're a one-trick-pony - i.e. that's all they can do. They can not replicate the kind of sound-shifts that a WELL PROGRAMMED (and that's the key!) POD can create for you at the push of a footswitch.
Who wants to watch a guitarist fiddle about with his amp for 10 minutes after every song whilst he attempts (and fails) to dial in the sound for the next song? With a POD, you do all your homework (sound-tests etc.) in the rehearsal studio, and live, you just tap your footswitch and hey-presto! Instant cool sound. So it's infinitely better to use a POD when it comes to versatility..
Ok, this is the one thing that I wanted to comment on.
I still remember the worst show I'd ever seen, it was at this old rail station that had been converted into a (pretty cool, actually) club, that occasionally booked live shows. I was there with a few friends one night, and there was a cover band playing, a guitar-bass-drums trio. All three guys sang, and each would trade off on lead vocals based on who could imitate the original vocalist the best. The guitarist played a Vetta head, and had a patch bank set up for each song, trying to nail the exact tones of the original recording.
Technically, I suppose it was an impressive enough performance, and the band was certainly competent enough. However, it put me to sleep - they might as well have been a CD player. They were a human jukebox, and no more, and nothing of "themselves" came through in their performances, they were just carbon-copying the original. I was bored to tears. The only thing that saved me that night was there were a bunch of russian girls there working as camp councilors somewhere in the area and for some reason they thought I was russian too so they all wanted to talk to me. Which was nice.
I agree with you that user error is the biggest problem with the Pod - not knowing how to dial it in. However, I'll take that a step further, and say there's an added risk - not knowing WHEN to NOT dial it in. You have, what, 60-odd different available amp models on tap in the latest version? Just because you CAN use a million different sounds in a show doesn't mean you necessarily should.
NOTE TO GERG - for your summary, start here.
I've always appreciated bands who put their own spin on things, have a bit of personality, and have a band "sound" so even when they're doing covers, it sounds like the same band. Part of that is performance and talent, but part of that too is going to be the gear they play and the tones they go for. Having the same basic rhythm guitar sound, the same basic clean sound, and the same basic lead sound can go a long way towards providing a sense of coherence to a set - sure, sometimes you might use a different pickup with your rhythm tone, or roll back the volume on your guitar a hair to clean it up a little, and maybe on some solos you want a bit of wah or delay and some you don't, but the fundamental "tonal identity" of the guitarist is always there. With a Pod, you can very easily lose that. I think a band playing covers should aspire to be more than a CD player, and being able to program a different patch bay for each song you play (or, conversely, feeling the need to dial up a different sound from your amp each new song) makes it far too easy to fall into that trap.
So, do you REALLY need a unique, customized guitar sound for every cover you do? Or could you get through your set with a clean channel, rhythm channel, and lead channel, a pedal or two if you need 'em, and just the controls on your amp if you had to? Versatility is nice, but sometimes it's kind of dangerous too.
(I say this as a guy with a pretty kickass four channel tube head, who has absolutely no fucking clue what to do with the 2nd channel. It's nice, it's fun having it there, but I don't NEED it.)