I also had a similar dilemma regarding Delhi airport. Tons of horror stories were floating around on the internet. It was 2007 Dashain time and travel agents were quoting outrageous prices. Delhi was a lot cheaper (~$1700) than any other options($2100 & up). However,  I was not sure if the "significant price difference" was worth the ordeal and sheer humiliation people had been describing in several expat nepali forums.

I talked to couple of people who had earlier traveled via Delhi. Almost everyone advised me NOT to get out of Delhi airport as most of the problems would arise outside of the airport. Custom, immigration, Cabs, hotels-Each of them would be a great challenge to handle. The consensus was-As long as you stayed in the transit lounge, you would be okey. Finally I decided to experience on my own and give Delhi a chance to win me over. I am glad to share this with you guys that I had a smooth transition at Delhi and reached KTM without any major inconvenience. I have described the whole process in detail below.

After we landed at Delhi airport, we were asked to go through the custom/immigration. We insisted on going to the transit lounge instead.(for some reason they just want you to go to the custom).   In Delhi airport you just cannot follow the signs and go to transit. You need an airline staff who will escort you to the lounge by doing necessary paperwork at the security. We were asked to wait for the staff. After 10-15 minute wait,  a cordial Jet staff came and escorted us to the transit lounge.

While Indian economy is getting stronger every day, the Delhi Int'l airport is considered one of the worst (of course when compared to East Asian standard). It was shocking to see that it had not changed a bit since I last flew via Delhi  during pre IT-boom (early 1990s).However,  I was relieved to find that the  toilet was semi clean (a lot better than the KTM airport) and there were a few food stall including a Subway franchise. There were Nescafe kiosks everywhere and you could buy a mini cup of instant coffeee for IRs 30.00 (Foreign currency exchange was a hassle, so either carry some IRs with you or be prepared to forget $1=approx 40 IRS exchange rate). Although we initially  thought of using Asoka lounge, later we reasoned it was enormously priced for non existent  amenities (people might have better experience). We spent several minutes walking around the transit lounge (its very small)  in search of empty chairs. When we found them, we did not leave them. Those chairs are rare commodity as you can not sit on the floor. (There was no carpet on the floor.)

One of the great thing about Delhi transit lounge was you could buy a can of chilled Heiniken for a buck (from duty free) and just drink right there in the transit lounge. I think  the duty free at Delhi airport (especially alcohol) was one of the cheapest I have ever seen.

I found the toilet situation quite funny. If you were a white, the guard would take you to the western style toilet. For all desis, it would be the pit latrine by default. I am sure if you give the guy some money, he will let you use the "western" toilet. This info might be useful to the ladies.

When we boarded the flight in North America we were told that we might have to collect our luggage in Delhi even though it was checked in for all the way to KTM. Luckily we did not have to.

Before boarding KTM bound flight, you have to go through the security again. Make sure you put a name tag in your carry on bag. The security is supposed to put a stamp on it. If they do not find a name tag they will not let you in. In our case the cop even did not bother to explain why he was denying entry to us. we had to learn it the hard way. Other than the lack of customer service from Indian government officials, we had no bitter experience.

There was a bit of hassle while coming back though. Over the last couple of years, Nepalis have been nefarious for carrying forged visas and passports. Moreover, Nepali passports have been greatly misused by a lot of extremists (both pakistanis and LTTE) to travel to third country, thanks to corrupt immigration officcials at TIA. So Both Airline and Indian intelligence have an interest in knowing who is coming from Nepal (Remember, airlines has to bring back the passenger if denied entry at the port of entry). Hence, all of us end up paying the price. They take your passport and residency papers and vanish for hours. Those will be one of the most difficult hours you will ever spend waiting. The preconceived notions that all Indians are corrupt and Indians do their best to make a Nepali's life miserable do not help either. In my case the wait was over 4 hrs. So I suggest that you note down the name and identification # of the airline staff who takes your paper. This information comes handy when you ask his/her peers about your passport situation. Contrary to the popular belief, I have not come across anybody who has lost his/her passport this way. However, the way they carry the passport compels you to be nervous (human error!). Throughout your wait, you will see different airlines staff coming to transit lounge looking for the specific passenger (are u Bob? Are u Jen?). This seems funny but as long as it works who cares. In my case the guy not only came with my boarding pass but also my luggage.  This partly explained the ridiculously long wait. All I had to do was identify my luggage.

To conclude, I did not have any unpleasant experience. I did not have high expectation to begin with, so I was not disappointed in any way. The airline staff were professional and spoke English very well. They communicated properly and did not show any disrespect. I would not hesitate to travel via Delhi again.