Now we're getting closer to helping ease my confusion!
Tony, I find your thought (prompted by the terrific post you're replying to) about quartz watches--that their attainment of near-perfection has freed mechanical watchmakers from having to pursue that goal as vigorously as other elements of perfection--to be fascinating in at least a couple of ways. First, it certainly makes sense, but second, it gets around my original conundrum: essentially, your thought explains the manner by which mechanicals have been freed to abandon (in large part) this particular aspect of the quest for perfection.
In other words: it explains why (and on what grounds) mechanical watches are "allowed" not to seek perfection in the functional sense of attaining the highest possible accuracy.
As long as one accepts that "perfection" does not have to embody perfection in all respects, then we're close to being home free.
And once we reach the point of your last paragraph, about how aspects other than perfection play a large role in the definition of luxury, then as far as I'm concerned, we're out of the woods altogether. It is, after all, these other elements, including desirability, scarcity, and the ineffable aspects of craftsmanship and even art, that are at least as much a part of luxury as perfection is. (And pace Thomas, I have absolutely no doubt that when you made the reference to "the endless pursuit of perfection" that started me off on all this, you had no intention of its being the only part of luxury!).
Best,
-Rip