At Bryght we have been using distributions (nee install profiles) for a while now.
One of the things we found very necessary was to alter the defaults provided by the install profile,
instead of just setting the variables during the initial install.
A lot of the time, we found it nicer to have programmatic defaults (ie: it defaults to the site name provided
in the hosting database), but also it fixes the issue whereby hitting the 'reset to defaults' button resets
to the drupal defaults, not the defaults provided by the install profile.
The patch for this is here : http://drupal.org/node/25745
This also introduces the loading of a profiles/$profile/$profile.inc file, which I feel is very important
for the install profile to be able to add code into the running distribution.
I think we should also considering using a 'distribution' namespace, and inserting the 'distribution' into
the module_list. This would allow distributions to do things like providing custom _help hooks, and a
couple of other things.