Whilst I understand where you are coming from, LHCS offers the ultimate in formation flexibility. It also removes the need for driving trailers in fixed or semi-fixed rakes. You have no argument from me, however, on the merits of distributed traction.
I think the LHCS flexibility is one of the key reasons for staying with that option. The service currently operates with 4x 8-carriage sets, but then one of those splits for Aberdeen and FW, with extra coaches added/removed at Edinburgh for the FW portion. The length of the FW and Aberdeen portions can very I believe depending on seasons. The sets also continually cycle to ensure they pass through the depot at Inverness regularly; so any given 8-carriage portion will need to be split up every 4th trip for the FW/Aberdeen portion. Having an EMU set-up with this flexibility would be more challenging.
I suspect new coaches + refurbed traction was a fair bit cheaper too (or at least before all the extra costs of sorting the 92s and 73s!)
Also the speed of bringing into service - with the age of the current stock and the desire to replace it ASAP, I think brand new EMUs would take longer to design, test, commission etc. than coaching stock.
Also, if you're going to have to add a diesel on for North of Edinburgh it gets to the point where you might as well have LHCS; or otherwise make a bi-mode E/DMU, but then that'd be a whole different ball game of development/cost.
There's potentially a passenger comfort consideration, too, as a (D/)EMU would presumably have traction motors and the like in the majority of the coaches, which would likely increase noise levels, plus fitting all the traction equipment / dips in the roof for pantographs etc. into the coaches would impinge on space to fit in the bigger rooms/en suites and whatever else they have planned.
Is anyone aware of sleeper services elsewhere in Europe/the world that use EMU/DMU stock?