Agree 100%, just normally when I hear the "I'd put that in leather" comment it's something that is shiny and well adorned. I'd much rather have form follow function also, just saying that with a powder coat finish which is almost a protective layer of sorts and micarta handle I wouldn't be concerned about marks from kydex.
Now, having been seriously bitten by a large Busse I can't view sheaths as anything anymore other than a means of carrying your knife without a large degree of risk being penetrated/perforated by it through whatever activities I happen to be engaged in.PO
Quality kydex with adequate retention tends to equate to fulfilling this requirement for me. Leather can get soaked and therefore loses a large amount of resilience to being deformed, kydex will not. Not to mention a heavy impact in just the right way (ie. falling) will have leather more likely to get punctured by the knife inside it.
Yes and no to your argument.
I've always preferred kydex sheaths over leather for the same reasons you mention, but the last year+ of working with leather has changed my opinion on how it behaves.
Retention - ask Andy if the DSSF or the ASH-1's will just fall out from the sheaths I made for them with retaining straps undone. They don't. I've made a sheath for a Fiddleback knife without retention strap and I could wear it handle down without much fear that the knife will fall out. It's in the design/the way they're made, I wouldn't take factory/generic sheaths into consideration though.
Cut resistance - that obviously will always be an issue with leather, buy there are also ways of increasing leather's hardness/durability.
Soaking - again an issue, but it also can be addressed, soaking in melted beeswax will saturate the leather so it will not soak in water, and also harden and stiffen leather to address the previous point.
Falling - again a thing that the design has a huge impact on.
I've seen a beautifully made leather sheath for ASHBM by a guy 'who is into' bushcrafting, he made it the same way he makes sheaths for the 4-ish inch bushcraft blades... the owner of the sheath just let the knife slide in by its own weight and about 2-3 inches of the blade came out the bottom, it cut through the welt because of the way too big drainage hole...
As for kydex, I think (not experienced that yet, as in those temps I tend to hide indoors or at least shade) that extended exposure to temps above 105F AND sun would cause kydex to just start being soft enough to loose retention and start deforming. Not catastrophic failure level, but soft enough to start loosing shape. I hope someone can say that it isn't so because he's been there and done that.