That is true, but search engines will still see it as a query string and may not index your content, and while google allows one level of querystring, anything more won't get automaticaly indexed.
It is seriously not a hard thing to do, all it's needs is to allow you to define a url format for sections and articles and then use a httpmodule to grab the request before it is processed, and reformat the url. There are free open source modules available to do this, so all we really need is a way to format the URLs.
RE the 404s, this would be fine, the url rewriter would attempt to rewrite any url that matches a specific format and so would still cause a 404 for pages that don't exist. For any pages you want to bypass, you just create a rule before all other rules to let them through.