Why not replace caps lock with a double-tap of the Shift key? This has the advantages of distance (still close at hand when needed) and memorability (Shift upcases temporarily, Shift-Shift upcases indefinitely) and eliminates one of the less useful keys at the same time.
Also, I tend to fiddle with keys, tapping shift nervously. Having this result in capslock would drive me nuts. It would be a deal-breaker if this functionality were in the keyboard firmware and not configurable.
Does anyone know of any software that can do this (for OS X)? I think double-tap Shift to toggle Caps Lock would be pretty neat. Or even better, I'd like to program an action after double-Shift (or other modifier keys too, Control, Option, Command).
Edit: I got this to work using KeyRemap4MacBook, if anyone's interested, use this snippet in private.xml:
<item>
<name>Double-Shift to Caps Lock</name>
<appendix>Double-tap ⇧ to Caps Lock</appendix>
<identifier>double_tap_shift_to_caps_lock</identifier>
<autogen>
--DoublePressModifier--
KeyCode::SHIFT_L,
KeyCode::SHIFT_L,
KeyCode::CAPSLOCK
</autogen>
</item>
