Compression

You can drive a cheater cam on the street if it's set up right.
True and that can be said for any combination. Whatever one is willing to live with is fine by them and OK by me. I’m not driving it.
I can only speak for my dyno as far as accuracy at low rpm. It can measure accurately but if the engine has a " big cam" the engine might not run well at low rpm and if the the engine doesn't run well it might not repeat well. Not having repeatability makes it difficult to evaluate changes.
Exactly
Racers have been using dynos to determine safe starting point tunes for race cars for probably as long as there have been dynos.
No argument there
If you take two identical motors unfamiliar to the tuner and race them side by side, I think the motor with a well sorted tune off the dyno has a better chance for success than a motor that does not. Not to say that eventually the other motor couldn't be tuned to run as fast.
No argument there
That might be what is most important to you when dyno testing and much of the time that is what my customer wants . But that isn't always the case for me or my customers at the dyno. As an example sometimes trading a few hp at the maximum in order to increase power somewhere else is beneficial for the customer. There is a lot of other data collected with the power numbers and sometimes that data is more important than the power numbers. Another example is in circle track racing where driveabilty is given precedent over maximum power. In enduro racing the amount of fuel used vs maximum power is a consideration so we might be looking at brake specific fuel consumption and changes to improve that. I have used the dyno to look at oil pressure and changes that affect oil pressure.
Somtimes I swear all my dyno is good for is finding oil leaks. If you have dyno you're chuckling right now.
You lost a wide verity of variables not previously discussed opening up the rest of the work can!

So, let me ask you, when a customer has a small engine like a 340/350/360 and there camshafts are 255@050, are they worried about the performance of the engine at 1,000-1500 rpm for there street beast?

Are you starting the dyno run at these rpm’s?