Session Prep Work vs. Campaign Prep Work
I have been DMing since 1985 and I will agree that the amount of session prep work I do has gone down a lot. I rarely run modules. When I do, I run them fast and loose. I make up NPC stats as I go, adjusting them mid-run if needed. Spell lists tend to use fairly standard "common" spells in my game, and I usually pick spells on the fly.
In truth, I often run a session with little more than an interesting idea and possibly a few notes scribbled on a piece of paper. Sometimes, I show up with nothing and just start making stuff up till the players get interested, and then keep things going where they lead.
There are two places I do session prep work. The first is names. I SUCK at coming up with names on the fly, so I tend to use randomly generated name lists and then assign various NPCs. The other place I do prep work is if I decide ahead of time to have a prominent puzzle or mystery. I generate handouts and such to help that sort of adventure along.
Frankly, I've spent more time printing and mounting Skeleton Key Games map tiles than I've spent prepping for a lot of session.
The only exception to the above is if I run a module for the RPGA. (Though I do this rarely anymore because of how my local RPGA group is.) In this case, I read through the module, making notes in the margins and highlighting important bits. I only do this because you're supposed to run the module "as written" as opposed to starting with the basic principle and turning it into something the original author probably wouldn't recognize.
Where I do most of my "prep" work is for the campaign itself. I started with a couple of hundred page long campaign guide, which incorporated the races and classes I was using, my house rules, and lots of setting information. I will add to that as the campaign progresses, or as either the characters or my imagination travels to new areas and I write more matieral.
I also use item cards for most magic items and most treasure. I spend time generating those in batches, and only have to prep for a session with them if I want something unique. Since I wing it so much, the players often get their cards at the next session because I didn't know before hand that the new item was going to be there.
As for following the rules, I completely agree with you. Once I'm familiar with the rules, I just run things. The only time I look up rules is when incorporating new material or when the rules lawyer in the group is starting to get uppity and I feel a need to slap him down on some point so that he stays quite for a few sessions.
I prefer to run the game with as few rule books around as possible.
Unfortunately, I have to agree with the OP on quality DM's. I know three DM's who can keep my interest for more than a session and one isn't even in the country anymore. The only good thing is that because I've been the DM far, far more than I've been the player, I tend to enjoy DMing more.