Well this is a quote from the OP.
"All I want is a phone that is like an ipod touch with ability to get apps (android apps are fine), has built in GPS that is free (just like you would get if you buy a gps unit at the store) can get on a WiFi network to surf the internet, and be able to play games, store music and video/movies for playing with a good and intuitive interface."
Obviously if he wants it like a Ipod touch. he knows won't be able to make phone calls, so......
The answer to this question is yes, you can use the Droid like a ipod touch. Yes it can still go on the market place, use GPs, and get on your Wifi network, use the internet, play games, store music, without activating it on verizon's network. How is this not answering the OP's question?