A very well argued, principled position from someone who obviously knows what he is talking about.
I think it's worth keeping in mind, though, that very similar arguments are often made about high-end home equipment. Can anyone really tell the difference between a $500 interconnect and a $1500 interconnect? I've never done a blind A/B, but I doubt that I would be able to hear much, if any, improvement for the extra $1000.
There's that old saying: the only difference between men and boys is the price of their toys (Not trying to be sexist. Applies to women also. Just harder to rhyme). Let's face it, we love gadgets around here, and the gadget value of a beautifully made amp or DAC gives many of us no end of enjoyment. Not to mention the hours spent poring over catalogs/websites/forums while dreaming of that next purchase or the ideal (really, really) perfect rig. That has not a blessed thing to do with sound, of course, but it brings legitimate pleasure to many of us, and I find it hard to criticize.
Also, I think your post makes a very cogent argument for the budget-fi sub-forum discussed in tomwom's poll/thread.
There should be a place for newcomers to find sanely priced stuff that will provide satisfying results with minimal expenditure. Such a forum might foster a sense of community among budget audiophiles that could serve as a buffer against the relentless upgrade philosophy. High-end geeks are proud of their stuff; budget geeks should be, too. Think of it as a practical application of the Team Mid-Fi idea.