According to the review at the link above, the AV420 does support on-the-fly playlists.
'The AV420 uses the Archos Double Browser system, which makes putting playlists together as easy as can be. In short, it keeps a running list of the songs you select on one side while letting you browse the directory, selecting songs from the other. As always, you can also create them on your PC via MusicMatch, Itunes (plug-ins included) etc.'"http://www.playerblog.com/archives/000314.shtml
that answers one question, and a few others. its all about the AV420, id be getting the AV480, but they are the same, only different sizes right?