By the way, I disagree with your suggestion that left/right should unpause when player is paused. If it did that there would be no way of silently advancing through a playlist

That's not what I meant exactly.

I mean that only when you hit the end of a playlist and "repeat" is off, and the player is sitting there silent with "End of Playlist" on the screen, I think that hitting the "next track" button should start the playlist at the beginning without having to unpause it.

The lack of this behavior always confused me in the past. Before I tagged my playlists as "Always Repeat", I would often reach the end of a playlist and want to start it over by looping around to the beginning by pressing the next track button (like you would with a CD player). Instead it went to track two and stayed paused.

I put the player into standby using the top button. Now if I press ANY button it comes out of standby AND unpauses.

This is very odd. Maybe your top button is sticking or is making intermittent (noisy) contact and isn't being debounced properly? Spilled a Mountain Dew on the player lately?