Ok, I keep going back and forth between wanting to do something more Sword & Sorcery and something more authentic Medieval. I'm wondering how well I could blend the two. Let me describe stuff I think of with these terms:
Sword & Sorcery--Conan, Hyboria, decadent city states, mix of cultures, snake-men, bizarre Cthulhu gods, pulpy high adventure.
"Authentic" Medieval--Knights, vikings, omnipresent monotheistic Church, everything else is of the Devil, fairy tales, dirty.
The biggest thematic difference is that in a traditional Sword & Sorcery setting the gods are of little to no help to mankind. Adventurers overcome supernatural evil with strength, steel and wits. In a Medieval setting trying to capture the feel of how people thought of the world back then, the Church is the symbol of good and civilization against the evil. Also, modern people generally have a bad opinion of the medieval Church.
I think a Medieval setting would have to leave lots of leeway for weirdness to include a little of the S&S feel. One problem with modern D&D is that everything is defined and categorized a bit too much. There should be an otherworldly land of faerie, a heaven above the earth and a hell below it. There is lots of room for variation in these big areas. More fantastical beasts come from Faerie, unnatural and loathsome creatures come from Hell. Ghosts and undead can haunt places, but they don't need a specific plane.
Religion is a touchy subject. The holiness of the Church shouldn't conflict too much with the average PC's natural desire to be an alcoholic, lecherous rat-bastard. Rather than playing up any paganism vs. Church division I think it would be better to present the Church as generally accepted, with pagan practices remaining as folk beliefs. A witch would be tolerated in town as long as she didn't actively harm anyone. The Inquisition and witch hunts weren't until late in the medieval period, anyway. Clergy are mostly concerned with calling on a monotheistic God's blessings and cleansing the corrupting influence of evil.
Poul Anderson's The Broken Sword and Nancy Farmer's The Sea of Trolls are good examples of mixing viking pagan ideas with a Church-dominated world. Basically, just put them next to each other without worrying about the metaphysical significance. Elves and Aesir exist and are beyond mortal ken, but the power of the White is stronger still. Heroes still do what they do--fight trolls and dragons. Find magic treasure.