I think you may have misunderstood the purpose of the minimals. "Minimal" here generally refers to effort - both on Hans' side and on the user's side - rather than any notion of these distributions being stripped down. There has been some discussion on the main list of the stripped down distribution type that I think you're looking for, but it's important to know that the minimals are *not* it. The minimals are designed as an "unzip and go" *complete* package - "everything with minimal effort", not "the minimum you need to get started".
Indeed, I followed the thread about the ultraminimals on the other list. However, I wasn't talking about stripping down Hans' standalone distribution to the bare minimum ... this would certainly need "maximal" rather than "minimal" effort on Hans' and Taco's side. What I was striving for is merely stripping down the complexity of the configuration mechanism for now. Most probably this would reduce a package developer's effort from "maximal" to "intermediate". Modularizing the whole distribution into small, cleanly separated components is quite another project. Without doubt ConTeXt would benefit a great deal from that but this is *not* the issue I was addressing in my post.
This is also illuminating. The concept of the setuptex script (as I understand it) is precisely to allow the minimals to operate completely independently of any other installed TeX systems. The point is that you only run the setuptex script in the shell in which you want to run ConTeXt. These environment variables aren't meant to be set globally (again, AFAIK), they are meant to be set for the session.
There I think you've exactly pinned down the problem. Each application wanting to run ConTeXt must call it from a wrapper script which sets these environment variables for the local shell. Keep in mind though that (at least on the Mac) this wrapper script is only needed for the minimals ... and certainly not for the ConTeXt from TeX Live, for example. If you use TeXShop as your frontend you'd then have to have different ConTeXt typesetting commands for each and every TeX distribution on your machine. Not exactly user-friendly ... Oliver