However, once that has happened, I can not tell by looking at the keyboard which language I have.
Are you talking about the virtual keyboards? If so, you should be able to see the difference between qwerty, azerty, and qwertz for English, French, and German, no?
Asking me to touch, hold and then select another letter is wrong. It makes this an extremely painful process. This a programing issue....When can we expect a fix?
You need to tell Apple how you want the virtual keyboards changed using this channel:
http://www.apple.com/feedback/ipad.html
Nobody can tell you if or when your suggestions will be adopted, and Apple never provides advance info on such things.
Since the current virtual layout system has been used for several years now in the iPhone and iPod, and a large number of people are probably used to it, I personally doubt that it will be changed any time soon by Apple. But perhaps apps can be created that provide custom layouts -- already there are apps available for keyboards for some of the missing languages on the iPad, like Greek, Thai, Arabic, Hebrew, Persian, Korean, and Vietnamese.
To have the normal layouts, you can use a hardware keyboard instead of the virtual one. A list of layouts that can be set is here:
http://homepage.mac.com/thgewecke/ipadkbs.html