Dave, I've fermented several beers and a couple wines in SS kettles, and they turned out fine. I treated one BoPils as an "open" ferment in the kettle and did a side-by-side test with a corny primary; there may have been a very slight taste difference, but I could have imagined it, too. If there was a taste difference, it may have been due to the fact that I skimmed the "open" ferment a couple times of crud.
The two issues I remember were watching out for end of fermentation because the possibility of oxidation is pretty big, and getting it out of there was problematic. If you have a kettle with a bottom valve, that's the one to use. A sihpon pump may not work so well given how shallow one gallon in a big kettle is... even with two gallons in a 16Q kettle, my siphon pump was causing me to swear.
I hear you on the small batches. I love variety... but personally, I can't go below 2.5g!