So it seems like if they switch to USB, a lot of current accessories won't work without putting a computer chip in THEM to decode digital signals that, right now, the iPod itself decodes.
Exactly. Your iPod would basically become a USB hard drive as far as accessories are concerned. They would have to do their own A/V decoding and would have to have not only their own processors but also USB controllers, CODEC licensing, etc. It would be incredibly expensive. And every existing iPhone/iPod accessory would become obsolete overnight.