The "rest of the story" as an old news commentator use to say, on the flow issue is while the piston first stage may be capable of flowing more gas at full flow (wide open) it does not matter since the second stage is the limiting factor in the system so reguardless of which stage can flow more, the second stage can only pass so much and that valvue is less than either first stage. Plus, any second stage made in the last 30 years or so can flow way more gas than a diver can possibly breath. While on the subject, we should mention there are 2 types of piston regs. The flow through and the flow by. We have been discussing the flow through piston which is used on all mid to upper range piston regs. The flow by piston is an older design that is still used on lower end regs like the Scubapro MK-2 and almost all Sherwoods. It, on the other hand, will not flow as much gas as either of the 2 designs we are discussing but it is still a very solid reg that has it's place.
Not too sure I agree with you on the reliability Nem. While the piston does have fewer parts, the 2 critiacal orings in it are exposed to the enviroment. Poor operator maintiance can lead to salt crystals forming on those orings damaging them. Also, the working surfaces of both the piston stem and face are exposed to water, again poor operator maintance can cause issues. On the other hand all of the critical parts of the diaphgarm stage are internal and protected from the enviroment. As long as you don't get water into the reg I would go with the diaphgarm. Now allow a drop or 2 of salt water into the reg and I totally agree, the piston is likely to withstand that abuse better.
I think we can agree, with proper operator care, both are very reliable and both work well. There is a very good reason those 2 designs have been around for over 50 years and still going.
Balancing is a totally different subject that dive shops like to throw around to impress uneducated divers.
The goal of balancing either stage is to help keep the breathing effort of the reg the same during the entire dive. Both the first and second stages can be balanced but balancing just one of them has the same effect. As tank pressure changes, in an unbalanced first stage the pressure it delivers to the second stage (called IP) will change which will have an effect on how easy an unbalanced second stage will breath. While you can tell it, most divers would not notice it in a well tuned second stage. To prevent that change, the designer can balance EITHER the first stage or the second. If he choses the first, then the first stage design keeps the IP the same as tank pressure changes, the second stage gets a constant IP over the entire range of tank pressures so it's breathing effort does not change. On the other hand, the second stage can also be designed in such a way that it compensates for changes in IP, keeping the breathing effort the same as IP changes. The up side of balancing the second stage is you can also get a little better preformance out of the stage but like anything there is also a down side, the stage has more parts that can fail and increased cost. The typical sales model is a completely unbalanced is the low end, a balanced first with an unbalanced second stage is mid range and both first and second stage balanced are the high end regs.
Back to piston vs diaphgarm for a second, all modern diaphgarm first stage are balanced, only flow through piston stages are balanced, all flow bys are not....well make that almost all, Sherwoods are flow by and balanced...