Filing here for consideration and comments. I can provide a patch if necessary.
1) Make the annotate API return either a list of annotated lines or the whole thing as a string so it can be used in 3rd party programs. I'm using the annotated string for my coverage-diff tool and currently had to copy and rewrite some of the AnnotateReporter methods.
2) Add a --stdout option (or better yet make it a default) so that annotate prints to the console.