Correct more or less. I can tell you that I'm not committed to the AF right now. I have not signed anything or sworn in and can decline my commission if I choose. I won't be fully committed until I swear in before leaving for OTS. You will have a medical screening at MEPS before even applying, but it's not too in depth. If and when you're selected, then you'll get your FC1 done and you'll wait until it's approved before leaving for OTS. If it's not approved you'll be medically DQ'd from being a pilot and reclassified into another job. At this point you should still have the option to decline your commission if you so choose and return to civilian life.
It sounds like you're going to be shooting for the 10OT03 board next spring, that is if you're going AD. FYI, -03 boards usually pick less applicants than -01 boards. To give you an idea, last fiscal year (FY09) there were only 32 pilots selected from the -03 board, however for the previous -01 board there were 116 pilots selected; something to think about.
As far as flight hours are concerned it seems you're of the mind that the board will think you don't have any follow through when it comes to getting your PPL or that you're not serious about it. It's a legitimate concern and I guess it comes down to how much flight time were talking about. If you have over 100 hrs and don't have a PPL then you might be right, but if you're still in double digits then I don't think it will impact you negatively, just my opinion. Regardless, you will be able to explain why you haven't finished it in your personal statement if you feel you need to.
Trust me at this point you have nothing but time. Research the process and don't let a recruiter bull**** you. Here are some links to help you out.
Everything for applying to OTS:
http://airforceots.com/portal/index.php
ANG process:
http://wantscheck.com/PilotSlotResources/ANGPilotSlot/tabid/63/Default.aspx
Great thread by fellow JC'er mhcasey:
http://forums.jetcareers.com/military-pilots/93994-aspiring-military-aviators.html
Also check out the boards at
http://www.flyingsquadron.com/forums/ and
http://www.wantscheck.org/Default.aspx?tabid=73
Hope that helps.