First, compression was originally designed for controlling dynamics and volume. Consider though that often times these were albums recorded to anywhere between 1 and 8 tracks where things were bounced together at the tracking stage. If this is the case, then compression on the way in certainly seems prudent.
Second, there is also more to a compressor besides just volume leveling and overall dynamic control. You could use a compressor say on a snare with a slower attack time to allow the initial crack through un touched but then hold back the sustained part. This can also be done effectively with bass guitar, more attck less sustain, or with acoustics, vocals etc... Release times can also greatly affect how the envelope of a signal is recorded.
It seems to me that too many people think of compressors solely as some sort of volume control unit. There ar emany other features that are useful for them. Originally they may have been for volume control, but then the way things were recorded and the tools used back then were VERY different than the process that most people use now. With unlimited tracks, larger consoles, more affordable mediums etc... we don;t do things quite the way they were done years and years ago. Why then should we be limited to using the tools in only the same way? Commiting to things in the tracking phase is not a bad thing, when it is done with careful consideration and knowledge and experience. We make commitments that are much greater all the time when choosing amps, guitars, settings, mic placement, drum tuning etc....
For the person that does not like software compression because it does not do much, I would loike to know what hardware comp is going to be used in such a way that it has dramatic impact? I would not generally want to use a cheap hardware compressor in a severe manor, which my bet is the option involved here. There are of course those few times when some cheapy comp does something to a signal that may be pleasing in comparison to a nicer comp, but this is typically more of an "effect" choice rather than a quality choice.
A good example of an upward compression unit might be
an Aphex Compellor.