Sean, while I respect your opinion on most matters, after looking into this a little more deeply, just about everything you said turns out to be wrong.
Your diamond cutting glass analogy makes no sense. The stylus isn't "slicing" through the vinyl, it rides along the surface following the modulations already cut into it, and just because the stylus is harder than the vinyl doesn't mean there isn't any friction. It is well documented that the stylus temperature can easily reach in excess of 100 degrees celsius. Where do you think that heat comes from? I'm guessing friction, and the drag caused by that friction must be dealt with.
You are also confused about the differences in viscous damping and friction. "Friction is the enemy of any well designed product that requires motion. After all, friction generates more heat, causes more wear, requires more force and is nothing more than lost energy." Viscous damping is not causing the bearing to wear away.
Your idea about instantaneous speed correction is completely incorrect. The motor doesn't and can't correct for every tiny variation in speed that would be caused by the stylus and there isn't a turntable in the world that uses the motor controller to do this.
It won't work for the same reason that motor driven, servo controlled linear tracking tonearms won't work. With the tonearm you are constantly trying to correct for something that has already happened so the arm is always out of postion. Same thing with the system you advocate. Even if you could build a controller fast enough to keep up, in order for it to compensate for the variations in stylus drag it would have to be able to predict when they will occur, and that's not going to happen.
So how can you overcome these variations in drag caused by the stylus when you can't predict when they will occur? One way is to introduce another source of drag into the system (such as viscous damping) that is far greater than the stylus drag, and while the motor is working to overcome this induced steady state drag it will in effect ignore the tiny variations caused by the stylus. To use an electronic term you may be familiar with, they are swamped out.
This is not poor engineering. It is a brilliant, simple, elegant solution to the problem.