I'm missing out on being able to make use of functionality that's pretty standard and simple these days.
+1 for this; it's a very key point. Sticking with the fixed pipeline will just put brick walls in front of you and horribly restrain you any time you want to do anything beyond the pre-canned blending modes. D3D8 does have shaders, but they're woefully primitive and not being able to rely on basic stuff like e.g. dependent texture reads is really constraining. It is possible to hack something together with some creative use of the bumpenvmap stuff, but that's also horrible to use and quite restrictive.
The best way to view 8 is as a short-lived interim version between 7 and 9 (just like the early shading models were interim between fixed pipeline and SM2/3), but if you're starting out new you no doubt have ambitions and ideas for cool things you'd like to do, and 8 is just going to depress and disappoint you in that regard.
That doesn't make it bad - it was awesome in it's time and especially compared to what went before, but it was of it's time and that time is long passed.