Hi Lucy.
I am responding from a slightly different perspective, 'down under' in Melbourne - where we have had a beautiful Spring day today. 
<1.  Our customers won't come to our hospital if they have to pay for their
formula.  The other hospital doesn't charge.>
<4.  How can we charge for formula?  Aren't meals included in the room
charge, so shouldn't the newborn get a meal they are entitled too?  (I've
already offered the response that breastfeeding mothers don't get a
discount for the non-use of formula, and was told "well they get the use of
your services and time, and that comes out of our budget")>

I can't understand why several people have written about the issue of charging mothers for the formula.  Do you have criteria that require that the mother pay?  The requirement here is that the unit does not accept free or low cost supplies.  The unit can purchase formula at the normal retail price.  Small maternity units get tins of formula from the local pharmacy when a woman chooses to use it.  There are some hospitals I know of where women are told to bring a tin of their chosen formula if they intend to use it, but it's not a big deal. 
<6.  If someone asked, "what is baby friendly?  I heard that is where you
have to pay for your formula" how would you respond??>
Baby Friendly is all about restoring to women their authority for their own resource, breastfeeding.  This authority has been eroded subtly and overtly.  Hospital practices which have been shown to have a negative impact on breastfeeding are the target - not the woman's purse.
<Of course people feel threatened with any change and this one
is certainly creating its share of threatened people. I need some really
good rationale to answer for these changes.>
There are plenty of threatened people here too, and comments such as "we have chosen to be mother friendly, not baby friendly" are sometimes heard. 
<2.  What benefit  is Baby Friendly, since we already do good breastfeeding
support and education?>
I believe there is real benefit in having external assessment under a process which is globally recognised.  The process of assessment by a team comprising health care professionals as well as consumers gives it a special status, quite different from internal quality assurance monitoring.  Who says you "already do good breastfeeding support and education"?
<3.  Why does the Lactation Community think that giving formula discharge
packs means that we aren't supportive of breastfeeding?  After all, don't
we provide education to the mother on how to breastfeed and who to call if
she has problems?>
Many people really trust professionals.  What we do speaks louder than what we say.
<5.  How can we present the concept of Baby Friendly to the community so
that it is looked at as a positive for ALL mothers and newborns?
Including formula ones.>
 Why should we want to?  Should we remove negative messages from cigarette packs?

I hope this helps you explore these important issues.
Joy Johnston