I've always thought that Chiltern were one of the best operators, I'm not that I'm an expert on who is permitted to do what, but the impression I have is that Chiltern were given their 20 year franchise as something of an experiment, and they rose to the challenge. Chiltern certainly now provide an alternative service from London to Birmingham, and but for ease of access to the route, I prefer the Chiltern journey, but I've never felt that they were purporting to provide comparable service. Similarly if I were travelling from London to Exeter, all things being equal I'd rather take the SWR route even though that's on a 3 car 159.
As others have said, I do fear though that it would be easy to be stuck with a rubbish TOC unless there were suitable control measures.