While the ZD in bulky by dSLR standards it's actually lighter than a 1D series body so the housed camera would not be bulkier than a Seacam or Subal 1Ds. I typically shoot all manual, as do many, so any features the ZD lacks wouldn't be missed by me. A 1Ds2 is $8000 while a ZD may not be much different. Lenses are another matter.
I don't think shooting JPG's underwater ever achieves the quality of RAW (especially when the camera consistently makes whites too green). I don't mind JPG above water and can see how certain photographers like it. JPG's can only contain 7 stops of DR, less than the capability of all dSLR's on the market, so it wastes much of the S3's supposed advantage.
I think there's no such thing as enough resolution! You may never get another chance at a shot, especially underwater. Problem is that, to get more, you have to have bigger sensors and, soon, better optics. My big concern with the ZD is that the larger sensor dictates that I will want to shoot macro up to 3:1 or more and there appears to be no lens capable of that. If you shoot small and crop you give up a lot of the advantage, maybe all of it, and such a large rig will need some working distance.
I agree, though, that water and ports may ultimately be the limiting factor. The ZD has a removable AA filter. The Kodak has none yet I never noticed any moire in any of my UW Kodak shots.
Another argument for the larger sensor. Lets you get away with less lpmm which is likely limited by the water. That's why I want FF, not DX sensors.
James, I agree that MR's review was more of a fly-by sniping than anything substantial and I have concerns about his methods. The article had that "thinks be knows more than he does" technical feel to it, yet MR is an experienced photographer and it bothers me that he couldn't see any value in it. MR is highly prejudiced though and is very brand-aware. His objective comments are cause for concern. Why does the camera shoot raw so poorly? Is a 512MB buffer too much to ask of a $2500 camera that takes 23MB raw files?
I was hoping you'd shoot some sunballs with your Kodak! After all, it has as much if not more DR than any camera today with the probable exception of the S3. I never had a chance myself. Like the Kodak, properly exposing the S3 may take some learning.