I'm sure a lot of people will agree with your analysis, and those folks will probably feel good about buying from a local dealer, assuming their local dealer isn't one of the creepy ones that give the good guys a bad name.
Others will look at it differently. Using the numbers in your post, I can pay $70 more for the insurance against potential bad things, or I can take the risk and be my own insurance. If I lose on this particular item, I'm out some cash. On the other hand, if I do the same thing on 5 pieces of gear that cost about the same, I save enough to completely replace any 1 of those five pieces if something goes wrong.
If 1 out of 5 pieces of my gear are having major problems within the first couple of years, I think it's time to look for a different manufacturer.
Authorized dealers are basically selling piece of mind and an insurance plan. I understand why divers like this, but I can also see why so many people are willing to take their chances.
Over the years I have noted local dives shops provide a lot more benefits than just insurance against defects, but sometimes that is more than enough.
For example I bought a Wisdom computer shortly after they were released and it failed over a year into the two year warranty. The dealer swapped it on the spot in the store after a phone call to confirm they woud cover it and send him a replacement. So in effect My computr failed on a Saturday and I was in the water with a new one the next day (with suitable regard to N2 loading issues).
It then failed several months later - outside the original 2 year warranty, but again the dealer repalced in on the spot, and that again repeated about a year later when wisdom # 3 failed. Number 4 is still going strong, although it is now seldom used, and they seemed to have resolved the design flaws that were appearing with the somewhat extreme use my Wisdoms saw.
There is no way I would have gotten that level of support from an internet retailer. There is no immediate "in store" replacement or a temporary loaner while yours is sent in as there is no "store", so LP could not offer those options even if they wanted to. At best you are once again waiting for them to ship you a replacement and more likely you wait while you ship it to them, and they determine whether they will honor the warranty before they ship you anything.
Practically speaking most internet retailers, lacking authorized company support, are not going to give you a fresh warranty on a replacement item but will instead limit their liability by cuttitng you off X months/years after the original purchase when the original warranty expires.
In this particular case, I paid a lot more for a Wisdom at the LDS than I would have on-line (nearly twice as much) but it was well worth it as I got excellent support and still have a working comnputer rather than a paperweight.
In my experience I have also often paid full retail at an LDS, but gotten other benefits such as free air fills, deep discounts on other items, great package deals. Maybe more importantly, as customer who buys from them rather than saving a few bucks on line, the shops I buy from provide up front service and support and treat me like a valued customer. I guarentee if you walk in, try out/try on an item and then save a few bucks buying it on line, most shops will not give you the same fast, freindly service when your on-line purchase develops a problem or needs service - for good reason, as maintaining retail floor space and stocking items for people to try out costs them big money as does the provision of high quality customer support - and those costs get paid up font in the higher retail price you pay.
So people can feel free to buy on line and save a few bucks, but they need to be fully aware that they are not going to receive a level of service that they intentionally did not pay for when they opted to buy on line. Unfortunately, those are often the same people who complain about local dive shops providing them with a low level of service or consideration. Well DUH...they are probably not going to get the same level of service at the same level of quality as they never paid for it and the LDS has to run a business like a business if they plan to stay in business.
