Jon, you make some excellent points and arguments.  However, I can give you some examples of Blender hair being used in animation if you're interested.  Here's some links:

Blender hair dynamics test:

https://www.youtube.com/watch?v=XzGwkQRpOmQ

Styling Blender Hair in for Cycles render:

https://www.youtube.com/watch?v=WkaG1ZUf1B4

Styling and rendering long hair with Blender Cycles:

https://www.youtube.com/watch?v=WVJyGzPJIeQ

For examples of Blender hair being used in real production, you can research some of the Blender animation projects, like Sintel:

http://www.blender.org/features/projects/

Blender Hair Dynamics with Collision test:

https://www.youtube.com/watch?v=H9v1IHo1R1o

There are many many more examples of it in animation too.  Plus, with the Cycles renderer, it's become ultra realistic, as Cycles has special nodes to render hair that give it incredible subsurface effects and realism.