In the EU countries is VAT included in the airport duty-free prices or are we only saving the duty we would *ahem* be paying when we declare the items? Exchange rate is good for the USD so that alone is significant, but is there any way to save on both VAT and duty (aside from not declaring)?
Yes, the duty free price does not include the full VAT price. Let's say the VAT in whatever country you are in is 20%, that savings at the airport may only be 18% or something (instead of the entire VAT).
No, there's no way to save on both VAT and duty unless you declare the items to customs and they waive it.