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But when a Pokemon uses Earthquake, there's no physical contact between the two Pokemon. The attacker just creates an earthquake out of nowhere (meaning it's a 'special' attack) that damages the foe. Or am I completely off the mark here?
Think of it this way: if the attack requires connecting the two Pokemon through some sort of medium (other than air), then it's usually Physical. Otherwise, it's more-often-than-not Special. Since Earthquake involves shaking the ground while the other Pokemon is on it, they're connected through the ground, thus it's Physical. Moves like Hyper Beam, however, are shot over a distance, and do not actually need to have a straight line from attacker to attacked, so they're Special.
(This doesn't include when the Pokes are just standing on the ground, BTW)
It will be good to see. It sorta bugged my that some moves (like Bite) were special despite it being direct physical contact and vica versa. But yeah some pokemon get hit hard because of it.