As a competent falco mainer, I can help here:
Falco can keep opponents from moving entire matches.
Wrong. If your opponent is absolutely terrible, then maybe.
For all the technical stuff, Surgo, I use the regular set-up. I do NOT use the C-stick for aerials, even though it is good if you can get used to it. I don't always have my finger on the c-stick, but i have fast fingers from things like typing (130 wpm) and playing piano for 7 years. I don't really know how to help you when you're talking about not being fast enough and having cramped space, because I don't have those problems. I can give you some tips though:
• For waveshining backwards, jump before you move the analog stick diagonally.
• I use Y to jump. I think it's probably the best option a falco player has, if you can get used to it. I've always used Y to jump so when I first started playing Falco, it was great. Y is good because it is a shorter and easier slide from Y to B than from X to B. This makes stuff like multishining, waveshining, and pillaring easier.
• I don't know how well you guys are caught up with the current Melee "scene" but "DaShizWiz" is unarguably the most technical Falco. He is also (arguably) the best one out there right now. Mew2King and Shiz recently had a set (best 3 out of 5) and after watching them I can say that's probably the pinnacle of Melee thus far. Great stuff. If you somehow can't find them try looking up HansBantash on youtube and they're in my favorites.
• If you have any more questions (i'm not claiming to be an expert or anything, just a pretty good Falco mainer) and I might be able to clear up some stuff for you guys.
EDIT: @Surgo: Earlier I just kind of skimmed through your posts, but now I went back and read them and I have to say either you have amazingly huge/slow fingers or idk. I think not always having a finger on the C-stick might help you, but then your finger speed comes into question.