What kernel version are you running?
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2.6.11 from OZ3.5.3
BTW: LED works as expected when charging without suspending.
Gulp - I've heard nasty things about using chargers with too high a capacity - I think the Z relies on current limiting within the charger. I'd recommend you use a charger that can't supply more than 1A, and I hope you haven't fried your charging circuit or reduced the life of the battery too much in the mean time.
I don't think you are right here. First, power sources don't have "capacities". The most common are constant voltage sources, the provide a stable voltage (however only if the current drawn is with a valid range, mine is designed for 0...2.5A). Constant voltage sources don't regulate the current by any means. It's generally a bad idea to "charge" accus by plugging a constant voltage source. That's why devices have charging circuits to control charging currents.
Then, there are constant current sources. To provide a constant current the voltage will vary. You can charge NiMH or NiCd batteries with a constant current source given you know when to stop. However, if plug a constant current source to an (idle) device, you'll probably burn it because of the high voltage.
There are devices that can limit both current and voltage (used in labs). Basicly those switch between constant current and constant voltage mode by prefering whatever gives lower figures. If you set such a power supply to 5.0V and 1.0A, what you get is NOT 5.0V/1.0A but either 5.0V and current <1.0A or 1.0A and voltage < 5.0V. I agree, they make good safety nets. But we don't ever want the voltage to be below 5.0V.
I don't know anything about Sharps charging circuit. It may well be that it behaves different if the current is limited and it may even be that this intended by Sharp, but I doubt it. Good charging circuits should control currents more precisely. However for any precise control you need a well defined basis to start with. As dealing with constant voltages is much easier than with constant currents, device designer choose a constant voltage as their basis.
BTW: The official world voltage adapter by Sharp does 2A, only the tiny Japanese one is rated 1A. IIRC USB provides usually a not so stable 5V (500mA max) and you can charge some Zaurii via USB.
If do know more than I know, let me know. I agree that adapters which cannot do high currents are kind of a safety feature (such as disconnecting from the net gives you saftey from viruses) but what kills devices is usually too high voltages. (High charging current may decrease the batteries lifetime, but firstly this should be influenced by the choices of an adapter and secondly it's not as bad as frying the Z.) Low (unstable) voltages (as from current limits) usually don't do much harm but you can't expect the battery will get charged properly.