Overriding the Taxonomy View is dead simple in D7 with Taxonomy Views Integrator, to control output with Views, or Taxonomy View Modes, to control output with TPL and field configurations.

In any case, the added pages taxonomy gives you is good for SEO and content.

A 'category' is -not- a content type in my mind. You could have a site with 15 vocabularies- would you want that piled on to the site content types? You should strive to maintain as few content types as possible to reduce the overhead.

TVI: http://drupal.org/project/tvi

TVM: http://drupal.org/project/taxonomy_view_mode

Either one of those solves 95% of the issues you outlined with it.

"For example, a real estate site has a list of counties and they want each County to have a page on the site with a view listing all of the for sale property in that county. Making a content type called County and adding a node reference field to the property content type accomplishes this goal."

You can easily do this with Taxonomy, or Entity Reference, or Views. Make the county a contextual filter argument, and off you go.