I (and maybe just one or two others it seems) own the ME edition and will try and answer a few of your points.
Yes the ME is smaller. Not sure that the sound and/or picture quality is better on ME. I believe the 10" version has 3D sound whereas the ME does not. 'Picture' I think is the same.
No BBC iplayer app. When you access the website through the browser it takes you to the mobile site. i accessed full site through Dolphin Browser HD and it mostly played ok (note that the ME is not full HD though).
I see no reason why you could not use skyanytime. There is a webcam and pre-installed webcam apps so Skype would be fine too.
Overall i would say that if you wanted to read often on your tablet (or are simply weak wristed for some reason) then the ME is much better due to its light weight and ease of holding in one hand.
However, if you wanted it for watching movies I would go with the bigger one for three reasons. 1)Picture: the 10" has bigger display AND plays more types of video files than the media edition. 2) Sound - 3D sound on 10". 3) Battery life - generally piss poor on the ME compared to Xoom and Xoom 2.
Don't get me wrong...I really like my Xoom 2 ME...I'm just pointing out that if any of the three issues above would annoy you stay away from the ME.
Hope that helps.