Jim, a lot of us run three rail because thats what we started out with, at least in O scale, and by the time high rail scale locomotives and rolling stock came along we were too heavily invested in trains and/or a layout.
Given that you are just starting out I would only suggest either converting or selling off your three rail equipment and just go with two rail. Not only will it save you a ton of work but look much better.
Dead rail is up to you though I am in the group that is tired if changing or recharging batteries. The fewer the better, but thats just me.
Having spent most of my time with trains in HO I agree hand laying track and building switches is not a big a deal also greatly improves appearance.
Good luck with any direction you decide to go.
Pete
