Pete - firstly thank you so much for this thread, it has really helped a lot 
bieber et al - I am not even going to pretend to be as well read, experienced, or knowledgeable about lighting and lighting/strobist techniques as you obviously are. I simply followed Petes advise and used a Sto-fen head on, high iso and generally exposed for ambient.
The results with the Sto-fen are obviously better than without.
Now I cant explain it. I dont know about throwing light all over the place, boucing here, there, whatnot. I can say that I have shot with high ceilings, low ceilings, no ceilings, and in all cases, the Sto-fen simply makes this technique work. From a technical standpoint, I am sure you are 100% correct. From a result/practical standpoint, I really have a hard time coming to grips with your POV, I certainly cant agree.
Bottom line, though, is that this works for me and as a result the physics are really unimportant. Thanks again Pete!