In general I agree with your points, but...
That line of Yamahas used
dbx.
Dbx is totally different than Dolby.
Dolby does a band-pass filter type of thing where it selectively boosts the EQ in the high frequency spectrum on Record, and (theoretically) cuts the same frequencies by the same amount on Playback, thus reducing tape hiss in the process.
Dbx is a broadband compression/expansion, that's not band-passing then boosting/cutting high frequencies selectively. It's really nothing at all like Dolby, (thank god!).
Given that caveat, I'll agree that both Dolby and dbx were meant to be employed both on record and playback, and if you only employ it on either the record side or the playback side, it will surely kill yer sound.
The Yamaha MT-120 employs
dbx noise reduction, and it should be used on record and playback, exclusively. Any other creative implementation of dbx will yield less than satisfactory results. When used properly, dbx should be transparent, while simultaneously eliminating tape hiss and boosting net dynamic range by up to 30db,... and that's nothing to sneeze at.
Go ahead and call
dbx "Dolby" if u want, but it's not the same, and it only adds to the confusion for clueless newbies.
Use
dbx in record and play mode if you want hiss free recordings and boosted dynamic range.
Turn
dbx off if you're fond of hiss in your recordings.
If you want your sound to be thoroughly screwed up, turn it on or off for the different phases of recording. (It makes no real difference to me).
I'll agree with rayc, that you
turn dbx on and leave it on. The only reason they employed a
dbx defeat switch, was to accommodate a sync track on track 4, and also to accommodate commercially recorded "non-dbx" cassettes. There was something about cassette multitracker mfgr's,... that they went through a phase where they wanted to be compatible with everyone.
I'm sorry for bending yer ear on that, but rayc's right, that incorrect or poor implementation of
dbx adds to the misconception of
dbx as something that adulterates the sound,... but if it used properly it doesn't. Hardly anyone wants to do that or knows how to use it properly.
I'll not comment on
Dolby any further, other than to say
IMO it's a crappy and ineffective noise reduction.
Aaaagggghhhh!!! Sorry!! I'll get off my soapbox now!!