The point is if it has S-video out you can get S-video (better quality) AND composite with a cheapo $2.00 adaptor. If it starts out composite it can never get any better. It starts out crap and is always crap, so 1970's. Why ruin it and limit it for everyone because you don't want to spend an extra $2-3? I think there should be a multi-out for RGB,VGA, S-video etc. If not that there should at least be a VGA-out and some sort of a converter box accessory to get the other lower formats.
A VGA-out would be able to provide RGB+composite sync (suitable for SCART) too if implemented well, and an S-video out is easily downconverted to composite as you said. Putting all of that into one (nonstandard) connector on the device might be possible, and then delivering suitable converter cables with the unit. I like the idea. Just don't forget that a SCART cable would need to be connected to both audio and video outlets on the device (while the rest of the connectors discussed here are video-only).
On a side note, even S-video looks crap after having used only RGB for over a year, but I realise that using RGB on a standard TV set is a European thing, so I guess VGA is the best option for the people across the pond, and Component or S-video below that.