I'm of the opinion that that is the only course of action once you've confirmed your system has been compromised. Once you confirm that you have malware working on your system, you can never truly be sure of what its done. Sure you might have cleaned the noisy virus or trojan that got your attention, but you can never really know what else it brought in and installed before you neutralized it. Root kits can be hell to detect once installed. Heck, you can't even be sure you got the virus you found since the determination of whether its on your system is limited to what the scanner or cleaners coders know the virus looks like on the day they wrote the definition. Some malware even goes after your Windows restore point.
No, format and reinstall is the only way to go once an infestation is confirmed. No doubt its a hassle, but its easier than having an undetected root kit.
Yup. You can't trust a computer that has been infected or hacked. The only solution is a full reformat (preferably with a partition wipe as well), and reload.