Sure, if you're only going to have 6 electric vehicles (or will be rolling them out slowly) it would make more sense to put them in areas where air quality is a problem (to start with). I was just saying that I don't see a problem with Llanrwst and Blaenau having electric buses as well as in the big cities.
Ultimately, zero emission will come; First have stated that they will aim to be "zero emission" by 2035 through biomethane, electric or hydrogen. However, in the early days (and these are early days), the greatest health benefits will be in the more urban areas.
You're right; I hadn't forgotten I just left all that bit out (although the Tempos I really love are YJ55BKE/BKF which weren't used on the X40/X41). My point that Carmarthen-Aberystwyth was originally meant to be a TrawsCymru route but was delayed until subsidy was needed still stands.
In terms of the X40/X41 and its predecessors, the need for subsidy is more nuanced. For Aber to Synod Inn 550/551, daytime services pre 2005 were commercial IIRC with support for evening and Sunday runs. The 201 from Aberaeron to Carmarthen was two hourly with a mix of supported and commercial though at a lower frequency.
When WG decided that they wanted to create the X40 (and X41 variant), they provided the Tempos and also provided subsidy; the Arriva runs were supported via a tender administered by Ceredigion whilst the First ones (subsequently taken on by Arriva) were via a tender administered by Carmarthenshire. It was already a WG route, just under the TrawsCambria brand on existing/amended liveries for Arriva and First.
It was only when Arriva, scared that they would lose the new T1 tender and so lose most of their Aber work) that they then registered the 40/50 commercially. Arguably, they were never going to be able to sustain that level of service south of Synod Inn on a longer term basis.
EDIT: there was the Arriva 701 running through to Cardiff before the X40; one of the original TrawsCambria from the late 70s