I follow your opinion Tony. I don't really fancy the Settings block because it is daunting! Sure you can find whatever you need in there, but until you're getting really familiar with it you won't. Also, I feel that the page "Preferences/Settings/Options" could be layed out in a way that would also help advanced users finding what they need very quickly.
As you mentioned too, some settings are used once in a semester, or even never! Why should they be present on every single page? What is important is being able to find that setting, not much how fast you access it.
Also, let's not forget that the Settings block content changes almost on every page, especially when you navigate between modules. And it is not made clear to the user that it changed, nor why. I think rather than its content, that's what is the more confusing for the users. At first you have the Course settings, and on another page it's not there any more (it is, but collapsed). That is closely related to Joseph's comment above.