Jollywa, my apologies for expressing myself so oafishly.
I recommend the Targus or Griffin stylus (same pen, different brands) or the the Boxwave capacitative stylus. Many people here also vouch for the Stylus R Us styluses, but I'm not a fan for various reasons.
You've already pinpointed the advantage of edit2 mode in NTHD, ie, no need for any palm-protection as you're writing at the bottom of the screen.
In my opinion, palm-protection in note-taking apps is generally a bad joke except for Notes Plus (of which I'm not a big fan for various reasons) and neu.Notes, which is pretty much the only app I use nowadays except for Good Reader, NTHD and neu.Annotate. It has quite a few bad comments in the App Store, but they seem to be for earlier versions. I use it extensively every day at work (in conjunction with a projector) and cannot recommend it highly enough. Amazingly, it's free.
There do seem to be some possible issues with its vga mirroring under iOS 4.3. For that reason, I'm not upgrading to 4.3 until the developer can give an assurance that these issues either don't exist or have been ironed out. There is an update coming sometime in the next two weeks.
Writing with your finger is ok if you don't have to write more than two words. For those kinds of uses I guess an app like Penultimate would be fine.