I definately like the idea of:

“if the points were not arbitrarily assigned via how much an item or order costs but rather per item . Give each item a space to enter how many points it is worth”

That way items with larger margins can be made more attractive to customers by being able to give them moree points. It would also allow a store to push things that are selling less and even a new range.

Very good idea.

check this thread : http://www.magentocommerce.com/boards/viewthread/3422/P30/