I really don't think there are too many skills to handle. Feats may be out of hand if you use every single sourcebook, but otherwise, they really aren't either. The Player's Handbook doesn't have an unmanageable number of feats, and it's a foundation to build on. If a campaign focuses on arcane magic, allow feats from Complete Arcane. If a campaign focuses on undead, allow feats from Libris Mortis. But if you're playing in a world with neither arcana nor undead, or where they are either diminished or irrelevant, don't let players dig through those books to establish feats. The only people who need to use every available published source to create feats should have already learned that ADD and AD&D don't mix.
As far as prestige classes go, if every prestige class is available, something is wrong. Prestige classes should represent developed groups of people. Many prestige classes force the player to contact someone who is already a member of that class to conduct some sort of training or initiation.
That being said, the thing that originally caught my eye in this thread was the merging of skills. It's obvious to me that this is a bad idea, but some people clearly don't see it. Some examples:
Bluff, Intimidate, Disguise, Forgery -> Persuade
This means that barbarians (who are illiterate) can increase their abilities of forgery as a class skill, unless they lose the ability to intimidate as a class skill. The high skill points given to a rogue are now almost useless, since three skills that they tend to buy have been combined into one. They only need 1/3 of their skill points to get the same results.
Climb, Jump, Swim --> Athletics
The world just doesn't work like this. There are long-distance jumpers who don't know how to swim. There are people with no legs that can still swim, but they certainly can't jump. Furthermore, beings with special feet or some like apparatus would receive a bonus to climbing. If it has to be specified that things like this give a bonus or penalty on athletic rolls to climb, athletic rolls to jump, and/or athletic rolls to swim, they should simply be different skills. Consider background - a person living in a desert society that builds their homes in excavations in the sides of a mesa would naturally have climbing ability, but not swimming. We'd have to rule that they have athletics for the purposes of climbing only, effectively creating one skill-category with different sub-skills. Why not just leave it as one skill?
Decipher Script --> approriate Lore skill (below)
This doesn't follow. I know French history, but I cannot understand a word of French.
Hide, Move Silently --> Sneak
It's very conceivable that a person has different competences in hiding and moving silently. Suppose you have an ankle that loudly cracks every time it is moved. That wouldn't make for good silent moving, but one could still hide. Hiding can be used by an entire party to set an ambush, although it's doubtable that the entire party would move silently. These are completely different skills.
Knowledge (arcana), Use Magic Device, Spellcraft, Knowlege (psionics), Knowledge (the planes), Psicraft --> Arcane Lore
This means that learned wizards, crafty thieves, and nefarious psychic warriors all use the same skill for their primary abilities. I must admit, that seems very much like the previous sarcastic comment about merging all skills into one skill called Skill.
Listen, Spot, Sense Motive --> Awareness
Again, these skills really can't be combined. Despite the fact that some people think there are too many skills, I think we should be allowed to role-play a character who doesn't necessarily have the ability to see hidden monsters, but who can understand people and their motives, or a keen elf whose sense are sharp as a rapier, although his exact nature fails to save him from his own naïvete.