OK, so I am about to commit finger to keyboard and start coding a new site.

Do I author it in HTML or XHTML? Should XHTML be served as MIME type text/html? or as application/xml+xhtml?

Is it wiser to ditch XHTML and opt for HTML 4 ?

I think you should go for xhtml. If its coded clean it will make your life easier and probably work better on most browsers as they use a different rendering technique for better results.
As far as MIME goes id serve it as text/html, the browser will then pick up what it is from the doctype and do its thing.
As far as wisdom goes im not sure, its a new standared and they must make new ones for a reason, but its all up to you mate and if u need any help il do my best :thumbsup: