Most video camcorders these days tend to have features that not everyone wants but there are always some that do like them. There are different types of camcorders on the market that can quickly get you lost as you no doubt have already found out. DVD, HDD, MiniDV ARGHHHHHHHHHHH!!!!!!! So many choices.... In your price range your a bit limited, but I have just done the look around myself... If you want quality in your images look at getting a MiniDV, For ease of transfering to DVD, you can use either one with the right software..... I have a DVD camcorder DCR-DVD705E that I got from the CameraFarm, it does wide screen and records to DVD, you are limited to only about 20 minutes on high quality with these types of camcorders. The HDD ones are good for the average user, and record to a HDD using MPEG-2, this reduces the resolution of the image and can limit its ability to see in low light, often getting flooded with noise
The best types to get are the MiniDV, it records to tape and with the right software you can make some pretty good movies, many video editing software these days support miniDV's, after a while the tapes do wear down and as you record over and over again you lose a little more, but not noticable unless you have a $15,000 camera system LOL...
So my advice would be to look at getting a miniDV system, Sony's do have some good cams goto
http://www.sony.com.au and have a look, the prices are usually high but look around for better prices on the net
Canons are ok but sometimes lack the features of some of the other brands (JVC etc..) many video cameras can be hooked upto a telescope with the right adapters, but since it really is for your wife, you should think of what she wants more closely... Difficult I know LOL.. Or if you want the DCR-DVD605 is a good DVD recording camera by Sony. it fits in your price range and records stills too. But limited by the amount you can record onto a DVD in HQ mode. although you can get 2.4gb 8cm DVD's... if you do go this way get the DVD-RW disks, so much cheaper LOL
Good luck with your hunt..