Type I tape has a characteristic distortion which is often sought-after in order to recreate a "classic" sound. Note that most studio recordings on analog tape were done with (professional quality, wide) Type I tape.
Essentially, Type I tape distortion on peaks sounds euphonic, and you can use it effectively as a limiter in recording situations.
Chrome and Metal tape don't sound good when they distort, but they do provide substantially higher dynamic range. It can, and often is, argued that Rock & Roll and other forms of loud music can be recorded just fine with the level of peak distortion Type I provides. Type II and IV are quieter, but may not sound as rockin' when you hammer the levels.
Yes - and I would argue that PA rock has a rather limited dynamic range - and can benefit from the "smash" at the top.
As for the quiet - that's what the DOLBY C is for - it really works well, especially with copious amounts of gain.
I did an experimental comparison a few years ago, that was posted here - but I had to move the files. If I can find the files, I'll put them back on my server.
I'm not going to say it was impossible to spot the digital sourced recording - but it wasn't a blowout!
I did one with cassette, normal tape and Dolby C and another with an old AKAI reel to reel.
I also tend to think the D5s VU+Peak metering led to, generally, too conservative level settings.