Hi.

of course we could alternatively export all as <div class="tag-subtag-..."> but i don't like that too much; html itself is not rich enough for our purpose

What about giving developers the ability to change the destination element? For example:

\setuplist[chapter][
  xml={\starttag[h1]#1\stoptag}
]

Would produce, upon export:

<h1>Chapter</h1>

Or (using "export" instead of "xml"; I don't care what it is named):

\setuplist[chapter][
  export={\starttag[div]\startattribute[class]{chapter}#1\stopattribute\stoptag}}
]
 
Similarly, this would produce:

<div class="chapter">Chapter</div>

This would offer the flexibility of custom XML documents without affecting the default behaviour.

  * Generates XHTML headers (including <!DOCTYPE and <html...>)
not needed as we're 'standalone'

Having the ability to produce the <!DOCTYPE...> and <htmnl> elements could be as simple as:

\setupexport[
  standalone=no,
]
 
  * Produces images as img tags, rather than float tags.
the css can deal with them (info is written to files for that)

Yes, but they aren't standard. There is an ecosystem of tools (e.g., Calibre, normalizing CSS templates, etc.), not to mention a widespread knowledge-base, that groks the minimal XHTML specification. Plus, using XML tags that are not in the minimal XHTML spec. means more testing on more devices to make sure that their XHTML parsers render correctly.
 
xhtml has no typical tags .. it's xml + css (or xslt) ... unfortunately browsers have

That is, a Strictly Conforming XHTML Document, as per:

http://www.w3.org/TR/2000/REC-xhtml1-20000126/#docconf

the export of context is in fact just xml, and by tagging it as xhtml we can apply css to it; but if someone has a workflow for producing epub an option if to postprocess that xml file into whatever epub one wants 

I could transform the ConTeXt-generated XML into strictly conforming XHTML, but it was a step I was hoping to avoid. Right now my process is:
  1. Convert XML data to a ConTeXt .tex file.
  2. Convert ConTeXt to either PDF or EPUB.
  3. Stylize EPUB using CSS.
I want to use ConTeXt here (instead of going directly from XML data to EPUB) because ConTeXt provides functionality such as multiple indexes, table-of-contents, and bundling the .epub. Having an extra step to generate strictly conforming XHTML is architecturally painful as it means transforming the document three times (XML -> ConTeXt, ConTeXt -> XML, then XML -> XHTML).
 
Everytime we look into epub there's another issue ... it's not a standard but reversed engineered application mess (happen soften with xml: turn some application data structures into xml and call it a standard)

Some book vendors only accept validating EPUBs. ConTeXt is documented as being able to generate EPUBs. The documentation should state the EPUBs do not validate and do not generate strictly conforming XHTML.

I have spent the last three weeks converting documents from LaTeX to ConTeXt because the documentation stated that ConTeXt can produce EPUBs. While true, the documentation did not mention its shortcomings. Had I known in advance, I probably would have gone straight to EPUB using Java or, with a little revulsion, PHP classes. ;-) That said, I probably should have tested this feature sooner. :-)

as i have no real use/demand for epub it's not something i look into on a daily basis

How can I help resolve these issues?

Merely "testing" (which I am happy to do) isn't going to produce a strictly conforming XHTML document.

Kindest regards.