In ideal acoustic settings - concert halls; coffeehouses which cater to people who come primarily for the music, and in which people who talk during the music are asked to be quiet, then thrown out if that doesn't work, and anyone whose cell phone rings during a performance gets scalding hot expresso poured down his/her neck; house concerts; one's own living room or back porch - I agree with you, wholeheartedly.

Problem is, 98% or so of musicians who play gigs don't get to play in such environments. They/we play in bars, restaurants, festivals and other outdoor gigs. Where people either don't come primarily to hear music, or are conditioned by rock music to have the music so loud that they can go right on gibbering like baboons and it doesn't interfere with other peoples' listening.

The choice becomes one of plugging in or not being heard. You can play into a mic, but it just doesn't work as well in terms of penetrating the background noise. And the degradation of the sound quality, while real even with the best pickup systems, is not noticeable in those environments.

That's my take on it, anyhow.

Peter