Interesting post Hortland, and largely a persuasive argument. However, allow me to nit pick a couple of points:
"1. Evolution has never been observed."
-Agreed. However, the introduction of a significant and beneficial mutation into a breeding population may in fact produce something resembling the type of macro event you describe below. Understand, that we observe first hand an incredibly tiny slice of time.
"2. Evolution violates the 2nd law of thermodynamics"
"Or in other words:
All natural systems degenerate when left to themselves."
I might suggest that this is a misapplication of the 2nd Law of Thermodynamics. This law of thermodynamics is anything but universal in it's applicability. Genetic variation and mutation within breeding populations is not the only place where this law may be seen to break down. In Einstein's theory of General Relativity it can be demonstrated that Entropy cannot take place until the universe enters a "contraction phase". This fortunately has not yet happened, as it appears that the universe is still expanding, and the laws of physics upon which we all depend have yet to be repealed.
This is by far not the only example of incompatible scientific theories. But take heart, when they finally reconcile Relativity with Quantum Mechanics, perhaps there will emerge a way to apply thermodynamics to this topic.
"3. There are no transitional fossils"
The absence of any sort of transitional forms may not in fact matter, as they are absolutely not necessary for the theory to remain viable. (See above with respect to introducing mutation to a breeding population) Also bear in mind that review of the fossil record provides the scantest possible sample of the organisms that have existed during any given era. Our sample size of organisms over the millenia is an incredibly small percentage. We have no evidence to demonstrate the effects of mutation upon mutation taking place over thousands of years. Yes the fossil record contains no proof. However the sample size is far, far to small to use this fact to refute the theory.
Essentially what this means is that Evolution, so far, can not irrefutably be proven or disproven. Evolution in fact, remains a theory.
DuBe
P.S. That's about as much coherent thought as I've been able to muster in a decade. With your leave, I shall now revert to being a moron.