This is the problem: Say I am selling an iPod in 5 colors and I have only 2 colors in stock in the drop down menu in the customer-configurable attributes of the configurable product.
Customer must select the color and add the simple product to his shopping cart before he is told it’s out of stock! (that would bum anyone out) - so how can ‘out of stock’ be displayed in the drop down menu before the customer commits to buying it. (better still - how can a simple product be disabled from the drop down menu, so that configurable product only shows customer-configurable attributes which are in stock?)
(disabling products manually is not an option when you have thousands of products)