You are right for sure about linearity ... but you forgot the objective and subjective acoustics conditions necessary to the evaluation of the price/ratio/ performance of the gear ...
i said objective because system/room/ears/brain imply objective parameters but also subjective non measurable parameters linked to our own personal journey and acoustical maturity...
Then the relation is non linear ...
To the OP's point about "diminishing returns", I would consider the relationship between money spent and performance gained to be much more logarithmic than linear.

