I received a nice reply from Bob Ippolito, the developer behind Talking Panda:
All of your existing Notes are stored in a numbered Notes backup folder on your iPod. Unfortunately, due to technical limitations of the iPod (there are scalability and nesting level issues), we made the decision to “take over” the Notes reader rather than attempt to integrate with existing notes. As you can see, we’ve made a special notice on our page hoping to make this decision more clear due to your input.
We’ll definitely be talking to Apple about upgrading the iPod firmware to better support our application in the future, but this is the “state of the art” as far as the iPod goes.
I apologize for the response latency today, but I (the developer responsible for the installer) am currently attending WWDC and do not have constant internet access while sessions are going on.
Hopefully, Apple will continue to expand the possibilities of the Notes function on the iPod.