Actually the most important problem WAS and IS solved.
The problem exists because the FAT32 support is not properly written (probably not designed properly, in the first place). Some improvements have been made recently, but it is still not a proper file system, therefore it needs some special handling to make it work. No other (supported) file system needs help to make it work with USB.
What do you mean? Not designed properly? Is still not a proper file system? What special handling does it need?
Large floppy support does nothing with FAT32 specifically. As Lars correctly said, the problem is with OS2DASD.DMD, which thinks that Large floppies are FAT, but not IFS case. So, without Lars' workaround in USBMSD.ADD, the OS2DASD.DMD assigns a drive letter to it, and then the kernel calls MOUNT routine of in-kernel FAT driver, not any IFS-es. So, the proper Large Floppy support requires OS2DASD.DMD (and maybe, kernel too) rewrite. It is significantly harder. FAT32.IFS does not require anything special, compared to JFS or HPFS.
And I can not recommend to use JFS in conjunction with non-removable USB MSD under OS/2 for production level at the current state.
That is flat out ridiculous. The current JFS is, IMO, the most reliable OS/2 file system to use with any device (removable, or not), that can use it. I find it far more reliable than HPFS ever was, and the performance is a whole level higher (especially with removable media). Personally, I would never use anything else, if there was no need to be compatible with other operating systems.
Having said that, I do use HPFS with the ARcaOS, or QSINIT, RAMDISK. The reason is that the RAMDISK can be created with HPFS format, and I can turn the cache size down to minimum (64 KB), which helps performance (it would be better if it was zero, but that is not allowed by HPFS).
You can also use the "/1" switch for hd4disk.add, to improve performance. It disables the strat2 routine, which simplifies things in ramdisk case, so it improves performance about 5 times.
I also use FAT32, to be able to interface with windows, which is still a necessary evil. I do turn off EA support to avoid problems caused because the FAT32 file system, in windows, does not know about them, and it causes nothing but problems, for very little gain.
I don't aware of any problems which are caused by EA support, except for EA files laying around everywhere. But this can be fixed in the future, as I plan to implement the "classic" EA support with "ea data. sf" file. Also, it should be noted that, with EA support, it is possible to store files, bigger than 4 GB, on the FAT32 volume, to transfer them between OS/2 systems. Indeed, support of big files up to 32 GB is possible without EA's, but bigger files require the EA support. The 64-bit file size is stored in three extra bits (previously, the reserved ones) of a directory entry. If it does not fit into 32+3 == 35 bits, the full 64-bit size is stored in the FAT_PLUS_FSZ EA. This feature could be enabled with "/plus" switch. This feature is called FAT+ and it is suggested by DR-DOS developers. Also, copying files with EA's, including the desktop from the OS/2 boot partition, works fine. I saw no problems with it.
FAT (12 and 16) still has some limited use, but I try to avoid them, except for special things. The new addition of ExFAT support to the FAT32 driver, is interesting, but I don't know how useful that will be in the long run. I do know that there are serious questions about the legality of doing that, which is the reason why Arca Noae.removes that feature from the FAT32 driver that they distribute.
FAT12/FAT16 have very frequent use -- floppies, flash sticks < 2 GB, some old mp3 players, which could not support FAT32, SADUMP partitions (I also discovered that 4 GB FAT16 partitions, with 64 KB clusters, are supported by FAT os2dump, and it could be read with FAT32.IFS, so, such partitions could be used instead of DUMPFS. Read more in fat32.inf documentation on this topic). Regarding the legality of exFAT support, it is legal. In some countries, like USA, there are software patents. So companies like Arca Noae, should pay licensee fees to M$. Arca does not like this, so they don't want to include exFAT support in their distributions. I made a version without exFAT (#ifdef-ed from sources, but they want sources completely without exFAT. (and without FAT12/FAT16 too, but this is ridiculous, because it hurts nothing, and it is nonsense.) Also, they don't want to sponsor my developments, but want to include new version with FORMAT/autocheck/other features, without paying me, so I'll suspend implementing their wishes, for the time being.). Software patents are not valid in my country (Russia), and also it is implemented in many free opensource programs, like FUSE exFAT plugin in Linux, FatFS (which is the library QSINIT FAT support is based on). So far, there was no M$ claims about these projects. As I understand, they only sue commercial projects. Free projects have nothing to get from. You can freely use exFAT support for your own needs. It is Arca has problems with using it, not you or me. (But I made a version without exFAT, they are not satisfied with it, and not even thanked me for making it).
There has been some discussion about porting the EXT file system to OS/2. I don't know much about that, so I won't comment, but word is that it is much like JFS. I also don't know much about HPFS386, but I suspect that JFS is more than a suitable replacement.
JFS was developed earlier than IBM/Exigen USB stack, so they did not recommend to use it on removable media. I successfully use JFS with my USB hard drive for a long time. I've seen no problems with it. The only thing you need is to explicitly eject the volume before removal. But thic is the case with any file system. Also, JFS is journalled file system, so it is not recommended to be used on flash sticks, because of quick wearing-out of log area. So, it is better to use FAT32 or HPFS with flash sticks (or any other non-journalled FS)