About pointsprites and billboards. I believe the point of pointsprites is that they should provide a quick way of rendering small points, i.e. 'thick' pixels if you wish. So if you wish to draw big billboards of some kind, you will sometimes get into trouble with size-restrictions on some cards and you should make your own quads from triangle(s) instead.
Regarding the thread referenced in the original post: I never really got any good answers there to my question there, and after a while I gave up using point-sprites for my purposes. It seems most people, including the people who wrote the damn d3d-documentation, do not know anything much about the more subtle use of point sprites. If you try to do anything at all fancy with programmable shaders and pointsprites, there's a good chance you will encounter some strange, unexpected problems.
After dx10 pointsprites will be a thing of the past anyway, or so I've heard..