And then when company X makes the new, smaller cell phone the company will have to use the standard battery so the phone won't be as small??? Where's the cool in that?

The reason devices use the standard AAA, C, or whatever batteries is because using them means the manufacturer doesn't have to reinvent them. Even the rechargeable battery pack for my cordless drill uses 4 D cell batteries. (Yup, I took it apart when it failed. And they are replaceable for far less money than a new battery pack.)

The why not is liability and "attachment". Liability in that there is no telling what a 3rtd party battery may do to a phone or its user, and the phone vendor (manufacturer, seller, or provider) will not want to pay for anything, should the batter cause a problem. "Attachment" is profits made from the sales of acessoris, because the initial product (the phone) is sold at a loss to a minimal profit.

The how, is a Mobile Power Consortium would specify sizes, mounting, and connection points/protocols for the various mobile device requirements.If a manufacturer needs a new size, they will present it to the Consortium for approval. The same consortium could also control charger and other accessory connectors and protocols.

State of the art lithium ion batteries have very specific needs. If they are charged incorrectly, they will be quickly ruined or possibly explode. The proprietary battery packs prevent people from trying to charge them with the wrong charger. Someday it may be possible to establish a few standard systems, but right now the battery technology keeps changing as new improvements are introduced regularly.

Simple, have a set of smart terminals (connected to at least an eeprom) which will relay the battery's state, requirements, and capabilities to the device.