I'm pleased to report that firmware 2.1 has solved the following issues for me.
1. Long backup times.
2. Long app installation times.
The first sync after installing firmware 2.1 took the normal amount of time to complete, and I assume that this was because a solid backup needed to be built. The second sync, and every sync there after, is completed, with a backup, in less than two minutes.
Installing apps (from iTunes) now takes less than 30-seconds per app.
I'm very glad that I decided to hold off and not delete and reinstall all my apps. Waiting was totally worth it. The backups are fast now, and I still have all my data.