"You wouldn't have to use multitracking to record only two instruments playing at the same time, but you'd end up with all the guitar on one stereo channel and all the harmonica on the other."

Not necessarily completely true - there would be bleed between the channels caused by the 'guitar' mic hearing **some** gob-iron, and the 'harmonica' mic hearing **some** guitar, wouldn't there?? It gives a degree of control, but not as good as when multitracking.

Or am I missing something? (It's quite possible) :-)