I know deepbit does PPS.  Are there any other pools that do?

Note that PPS pools are vulnerable to attack.  This has already bankrupted one pool.

Thus, PPS pools charge huge fees (deepbit: 10%) for insurance.

Someone please correct me if the following logic is incorrect, it is based off what I have learned so far about bitcoin mining

PPS fees aren't charged as a percentage off what you earn, but rather the per share rate is set at a point where on average the block will have left over BTC after it has been shared out and that left over is the pools fee. So generally speaking while you will always get the per share rate that you see on a PPS pool, the pool is still technically charging a fee, its just less obvious to the end user than that on a proportional system.