Good post swamp!
I realize that both 1 and 2 practical have value, but as of late I have really come to embrace #1 as the one with the most eye-opening impact. One thing it really hammers home is that there are only 6 (with 6MT) or 7 (with DCT) different speeds whereby an M3 can actually accelerate with
all the power potential of the S65. This of course applies to all other cars (and powered vehicles for that matter) too obviously.
Now, if we had a CVT, we could get all the power at any speed (well, any speed in the CVT's range).