I believe you are referring to the RD-XS32 and 52 series in which case yes, anything recorded using either of these units will have full edit control. It is the newer TX models which use TIVO and are editable only on manual recordings, which at least they offer. As you stated using any TIVO service will cripple editing. The XS32 (which I own) is not TIVO capable so this is not an issue.
I can report no Black Bug observed with firmware ZL11 Ser. #'s 246xxxxx and above and June '04 MFG. date. I have not software tested this to obtain numerical values as some have on the previous firmware but only report visual observation from playback on many non-Tosh players both computer and standalone. I also burned a copy of my LD Video Essentials to DVD using the XS32 and routinely use this in other players. I see no Black Bug and certainly no grey shift in Blacks as earlier reported.
Obviously people have a right to be concerned after the earlier reports and testing verification of the problem. And because there still seems to be early product remaining in certain supply chains out there it does pay to be careful. Unfortunately this "Bug" fear has kept people from making what could have been a very wise purchase.
As an aside, while I would always like more capacity, more features, etc. in any purchase, I'm kinda glad I didn't go for the larger XS52 as the content pile-up would be simply out of control by now. Just my $0.02.
But for people with HD content its capabilities including storage makes perfect sense