I agree about Will & Xander being established as main characters in this episode. I'd never thought of it that way before. This is definitely a milemarker in the season as far as character development.
Man, you're really observant! I think it was neat how Giles kept Xander's secret too. It showed that he wasn't just "Buffy's Watcher". He was loyal to the entire group - and he didn't favor Buffy just because she was the slayer.
I didn't mind Flutie being killed. I liked Snyder better, haha!