Yes, fuzzy matching typed response is certainly a lot better than having a drop-down list, because this again reduces the number of options a bot has to choose from, thereby increasing the chance that the bot will guess correctly. As is pointed out in the article, even a 1% chance gives bots an unacceptable level of success when you're talking about a botnet of several thousand machines making thousands of attempts every second. To conquer this, you really need to set the captcha to give at least a 1 in several million chance of success by brute forcing.
Consider this: if you have a botnet of just 5000 machines each making one attempt per second, that's 5000 attempts per second, which is 18 million attempts per hour. That means that even if your captcha creates a 1 in 18 million chance of success by brute forcing, that's statistically 1 success per hour. You can probably fight this if you IP block any machine that transmits more than say 3 unsuccessful attempts, or more than 3 attempts in less than a minute, for 24 hours.
Keeping the pictures easily recognisable across a wide range of cultures was one of the challenges my student faced. Things like polar bears and penguins would perhaps have been a bit esoteric for some cultures, but commonplace ones like cats, dogs, trees and cars are pretty much recognisable by anyone with access to the Internet.
Finally, I also agree with your points 1 and 2; I also don't like invoking third-party systems on my clients' websites, which is why we wrote all our own tracking, statistics and captcha systems. Not only is the site's behaviour more controllable, it's more secure, it's faster for the visitor and doesn't clutter up the menus of protection addons like NoScript with a slew of domain names.