halacha: theory and practice
The fundamental difference between the liberal and traditional movements within Judaism is whether halacha is considered binding. There are, of course, subdivisions; the Conservative movement holds that some halacha is different from what the Orthdoox hold. But they both assert that they are halachic movements following a process.
I think one's attitude toward halacha and observance is bound up in what you believe happened at Sinai. If you think that God wrote these specific words, and specified all of the oral law that goes with them, then of course you're going to be very careful in your practice. After all, you believe that God specified all the details, and you don't want to violate God's will.
If you believe that humans wrote the Torah (either wrote it down at Sinai, or wrote it down after the fact), on the other hand, you're assuming imperfect transmission and you're going to be willing to question implementation details. And some people who question might draw non-traditional conclusions, including that this isn't really binding at all.
The body of halacha is huge. Vast. Way beyond the ability of one person to completely internalize. And so, in the halachic movements, the individual does not have the authority to interpret. If you don't know what to do in a situation you ask your rabbi. If he doesn't know he asks his, and so on up the chain until you get an answer. (Or, in the case of the Conservative movement, sometimes two or more responsa supporting different answers, one of which your rabbi will choose.)
In the Reform movement, on the other hand, the individual is invested with the authority and responsibility to make decisions. He's not forbidden from using traditional sources or methods, of course; a Reform Jew could certainly adopt the practice of taking all questions to his rabbi and following the rulings he gets, just like his traditional friends. But he doesn't have to. God gave us brains for a reason, and we're expected to use them. And since (in this view) the Torah isn't the precise word of God, there's more room for questioning and interpretation anyway.
That's the theory. And it all sounds much more tidy than it actually is. In practice, some traditional Jews interpret and some liberal Jews do not follow through on that responsibility.
No traditional Jew takes every question to his rabbi. Congregational rabbis just don't have the time, and I'd bet most Jews don't have the patience. Traditional Jews also interpret halacha. But this isn't "within the rules" of their system, so I wonder how this is justified theologically. (It's easy to justify it practically.)
Traditional Judaism isn't monolithic, either. Practice varies from community to community, rabbi to rabbi, and, as I just described, individual to individual. The common baseline is pretty-well specified; if you drive to your Orthodox shul or are seen eating at McDonald's you'll definitely draw negative attention. But there's a lot more variation in practice than it sometimes seems from the outside.
There's also a custom of bending rules. Traditional Judaism says halacha is binding, but if you can find a loophole, you might be able to do something that would seem to be forbidden. Even, it appears, if that loophole enables you to do something that pretty clearly violates the intent of the halacha.
Talking about loopholes is challenging, though. One person's loophole is another person's legitimate interpretation. I think turning your lights and heat on before Shabbat begins, rather than sitting in the dark and cold, is part of the intent; the Ka'arites called it a loophole. (Actually, they rejected the talmud entirely, but that's the best example I can come up with at the moment.)
But there are practices that seem a little more clearly leaning in the "loophole" direction. On a mailing list a couple days ago, someone talked about the practice of attending (ticketed) football games on Shabbat by sewing your ticket to your coat before Shabbat, walking in, and letting the ticket-taker tear it off. (Of course you walk there and you don't buy any food.) This, to me, is twisting the rules to achieve a result that was pretty likely forbidden in the first place.
Another example: Someone on this same mailing list described how he carries a house key on Shabbat. (He doesn't live in an eiruv.) The problem is that you can't carry things, but you can wear your clothes. So if you can make the key part of your clothing, you're ok. He was arguing, however, that just putting it on a string around your neck doesn't cut it; the key has to be either functional (in an integral way) or beautiful. You could make a beaded necklace with the key as one of the fobs hanging off of it, I guess. What he did was to modify his belt to make the key part of the buckle. He needs the key or his pants fall down. But to me, this is rules-lawyering well beyond where it should have gone. When I am in that situation, I carry the key and make no apologies. I don't pretend to be doing something else.
One more: I was once at a gathering on Shabbat and an auction was to take place. On my way out of the room, I ran into someone who asked why I wasn't staying. When I said Shabbat precluded the auction, I was told not to worry; arrangements had been made so we could bid now and pay after sundown. If the halacha is about making a financial transaction then that's legit (and I very much respect the person who told me this, so that's probably the case), but the whole point of the halacha seems to be about not doing business, and I can't reconcile bidding with "not doing business".
While I can be just as intellectually stimulated as the next guy by the fine distinctions of rules-lawyering, I don't accept these application when determining my observance patterns. Maybe that's connected with how I view revelation; I think God gave us (many) specific directives and commands, but I think we weren't supposed to lose track of the meta-issues. Those meta-issues include skipping the Steelers game, wearing actual clothing but not fake clothing, and not shopping.
I do sometimes attend activities on Shabbat (pre-paid or free) that might be questionable on Shabbat. I carry with or without an eiruv. I even ride in cars and (very rarely) drive, if it's important enough. I do not, however, do any of this with the illusion that my activities are in keeping with the traditional understanding of halacha.
I know that the Torah does not require us to be unnecessarily strict, and that adding to the law is as much an aveira (sin) as subtracting from it is. We're allowed to interpret; we can put our lights on timers rather than sit in the dark, and so on. But when have we crossed the line from reasonable accommodation into rules-lawyering to get the outcome we want? How can we tell? Within halachic movements I would expect this to be an important question, yet I don't think I've ever heard a serious discussion of it.
Personally, I am fairly observant, including some halacha that I'm not really convinced on (but community is important too). In many areas my default approach will be to do, rather than to not do; I don't have to personally research every subject. But even if my practice were 100% in compliance with that of the canonical traditional Jew (should such a person exist), I wouldn't be a traditional Jew and I wouldn't represent myself as one. That's because I followed a very different process to get there. And that process is founded in beliefs about revelation.
a traditionalist response, part 1
I think that the key to a traditional understanding is not necessarily that God did dictate the entire Oral Law (Moshe Rabbeinu, for example, didn't understand the law taught in his name, in a very well-known story), but that the system will collapse unless that is the guiding assumption, the grundnorm. The halachic system does not make any sense without it. We need to concede that this is what all of our sources thought that they were doing -- upholding the concept of Oral Torah, and extending it rather than inventing "new law."
Now, for myself, I know that one reason I cannot agree with orthodoxy is that this kind of thinking results in too many pieties about authorship that just cannot be accepted with any kind of a critical understanding -- that Solomon wrote Ecclesiastes, or that the Song of Songs was originally written as a love poem between God and Israel. So your point about revelation (which I would characterize as the orthodox perspective, ie the general ahistorical view of Jewish law as a "text" to be read as though it was revealed in one go) is indeed a real stumbling block for me. However, I still think I can regard halacha as binding even with critical historicism, because even traditional Judaism in practice does build in all those loopholes regardless of the "text" of halacha. In addition to the distinction between d'oraita and d'rabbanan, there are so many ways that custom overrules "black-letter law." Orthodoxy doesn't admit that this is the case, but it's certainly there. So the key is motivation -- the halachic system allows for change so long as everyone is acting in good faith, as it were.
You raise a larger point, though, about the loopholes and whatnot. As someone who does believe in halacha, I have a few things to say. First, some of what you mention is folk practice that is clearly not halachic. You cannot carry a key in your shoelace or pinned to your shirt -- this is cut and dried. Even making it an ornament would not be accepted by many poskim, and I think it does have to be seen as a dodge. You're right that by carrying outright in that context, you're being more honest about what's happening than they are.
However, there are other things in which a broader point is at stake. An eruv itself, or an auction on shabbat, or selling your chametz to a non-Jew for the duration of passover, or a prosbul, are all good examples of what we might call a "legal fiction." These are things that seem to clearly violate "black-letter law" but only are permitted because of a fairly casuistic reading of the law. They violate what was almost certainly the original intent of the law but allows people to think they're being observant by maintaining it.
Here you raise something other than the issue of revelation per se for your argument: what is "the whole point of the halacha," after all? I think that's really the crux of the argument between Reform and traditionalism. And I don't mean to equate Reform with Christianity at all, but I clearly think that the idea of "the spirit of the law" is where Christianity comes from. When Jesus says that stuff about straining out a gnat but being morally blind to the meaning of the law, that's what he means. And I think honestly that he had a point, and that Christianity does have a point about Jewish casuistry that way.
(...to be continued, because my comment is too long...)