I'll check out Power Toggles. I may have tried that in the past, I know I had one that allowed you to put multiple swipe switches on the lock screen (phone, camera, etc).
Update: It was Widget Locker Lockscreen that I used in the past. I'll give that another try.
I was a long time Palm Treo user so I too was really attached to the physical mute switch.
Holding the volume rocker will have to do for now. I really am more looking for the visual indicator. The small vibrate icon at the top is a bit small (especially if I've already taken off my glasses at night). I'll get used to it, the jump from GB to JB is a big one. I like most of the changes, and will I'm sure grow to like the other changes.
Here is a picture of my N1 lock screen to show an example of what I'm talking about