Lee, You make a few good points:
1) yes it is the objective to win the quality, but if you can compete with the price point as well you can really take on the big guy.
2)getting a pallet of each...I agree not a good move, so how about only sell 1L bottles and only buy the 1L in pallete. Off premise will have no problem having the 1L bottles in place of the 750ml and on premise will have a slightly larger bottle on their top shelf to stand out against the same big boys.
Side note: Lee killer website, I love your setup and hope to visit by the years end. Perhaps we can talk about a few ideas some time.
Logan