i think this discussion would benefit from some distinction in terminology, each in two parts. i qualify the below statements by mentioning that i understand and agree that they are, like almost everything, my humble opinion. here we go:
distinction one: playing in time verus playing mechanically
a lot of posts in this thread use the term 'in time' without clarifying what they mean. when i think of 'in time' i don't necessarily think of a metronome--i think of keeping a consistent space between beats of a given length from measure to measure. My personal definition of 'in time' allows for subtle expansion and contraction of the duration of a beat over the course of a song but that remains internally consistent--beats are not dropped or suddenly put half-out. conversely, playing 'mechanically' is how i'd describe playing according to a perfectly consistent rhythm, usually achieved by playing to a metronome or using a highly skilled musician and the artistic decision of rhythmic consistency at the front of the recording process.
both have their place--as one poster mentioned earlier, you can't cut-and-paste or dramatically remix as well or sometimes at all with a rhythm section that's less than perfect. but, on the flip side, if the style of music depends on a degree of looseness, a metronome could be a detriment. there seems to be some contention about this last point, but i'll talk about that more next.
distinction two: playing with rhythmic dynamics (or feeling) verus playing sloppily
playing sloppily is of course bad, as the word connotates. but dramatically changing the tempo is not necessarily bad, and the more advanced the compostition is rhythmically, the less useful a metronome becomes. most of my experience with rhythmically dynamic music has been in classical and jazz environments. these musical traditions both depend heavily on both sudden and gradual shifts in tempo and time signature, and often, in their more advanced forms, travel the course of several tempos and time signatures over the course of one piece. you could probably play jazz or classical with a metronome, and/or you could work out the shifts and changes to a movement in Mahler's 3rd symphony and punch them into a computer for an orchestra to play along to, but should you? there is a reason that conductors are still in business.
the situation is very different with most aspiring rock & pop bands. most of the material is not as rhythmically complicated, and often the musicians are not as skilled as they should be. this makes the job of the sound engineer difficult. you need to determine who in the band is most eligible to the role of conductor, or if no one is qualified, or if the band wants to sound programmed rather than conducted. and sounding programmed is not necessarily bad, mind you, just different.
usually the drummer is the conductor, unless they either can't play in time (a la distinction one) or can't keep their rhythmic dynamics straight (don't know where to change without the music playing over the top). yes, both of these are problems. unless the band improvizes, i agree that the drummer should be good enough to know where the changes are, and if there aren't any changes, that makes inability to play the song through from start to finish that much more inexcusable. however, the recording studio is not a church--the musicians aren't paying to feel guilty.
as far as my feelings about what order to record instruments in, having recorded with a few bands as a home-studio engineer, as a musician and as both at the same time, these are my observations. none original, but all relevant:
it's the sound engineer's job to get the best he can out of the performers so that his work looks good, and if the tactic you're using isn't working, you need to change it. you need to identify how the band works, and build a recording process around it that suits them.
the ideal situation (i feel) would be to record everyone at once, saving only key instruments and usually vocals for overdubbing--and hopefully having a scratch track of these instruments as well. this has always been my best experience on both sides of the board. however, it requires either a studio set up to accomodate isolating the instruments but letting everyone still hear each other (i.e, drum room, iso booths for amps or musicians, and headphones of good quality and durability). and the band will probably like to be able to see each other, which means any iso booths need to have windows. you need a lot of mics or inputs, and you need to get everyone's sound 'right' before recording. and even if everything is isolated, you still may have to do many takes to get a 'good' one, overdubs aside.
since this is typically not a setup available to most beginner or home-studio recordists, the other options are either recording everything live--which is great if you and the band can pull it off, but it usually means a lot of takes and a lot of setup--or working track-at-a-time. if you're working track-at-a-time, the metronome is a tool that you can use if it fits the music and if it fits the musicians. some will want it, some won't. i fully agree with everyone who says that a highly skilled musician should be able to play to a click. but an amazing musician should be able to play to a click and decide that he either doesn't need to or doesn't want to based on the material.
the click track dilemma has a psychological impact on the band; many musicians rely more on hearing each other than they do on rote or physical memory of timing, inflection, dynamics or structural changes. in particular, many drummers may feel--perhaps wrongly--that click tracks are equivalent to castration. if the drummer is not comfortable with playing to a metronome, regardless of whether he should be, the result is going to be a lackluster performance. in that case, work out whoever has the best timing and what parts of the song are the most essential for everyone else to play to, and work in that order. nine times out of ten it will still be the drummer first, but you have to work on a case-by-case scenario.
to return this thread to what it started with--you can only do what you can do. if the band sucks, they suck. but, unless you suck, the band should still leave feeling like they had the best recording experience of their life, and regardless of if you think their music is crap, you still want them to leave holding what they think is the best recording they've ever done. and to do that you have to work with and around them, not against them.
