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Heh, you're right. Doh. :)

I agree with the granularity issue, though making the creature colossal and moving it 5ft south does not give it cover. See the first attachment in this post - a line can be drawn to every square of the creature with no cover. You must move it 10ft south, as in the second attachment.

Interesting. If it was changed to something along the lines of: "To determine ranged cover, the attacker chooses a corner of its square. If the attacker can draw a line from this corner to every square in the defenders space with no blocking terrain there is no cover." It might be a bit more...