Story points - there is a lot in theory I like about these and you hit on those points. But in practice where my teams have struggled is still in the definition of a point. People understand the relative sizing concept but they still want a definition of what one point means and that invariably winds up being some kind of a time unit, which means all points get thought of in time units. What techniques have you used to solve this problem?
Defects - some good points were made but you never really discussed how these are managed as work. Stories and defects are getting worked on at the same time, but how exactly? Are defects just lumped in with stories and the PM prioritizes them? I do not think so, but you are not clear in this area. If a PM prioritizes a story but the team spends all of its time resolving defects then how is value being delivered as expected? You seem to have left this out completely, or I missed it.
Finally, also on defects, while your points on not estimating them makes some sense, someone has to decide what to work on, and generally you need some idea how long things will take to make that decision. Even in your wording, you acknowledge some defects take a long time to fix, where as others are super-quick and in the end they all average out. Still, someone in the organization still cares about dates and delivery. It made a lot of sense to me where you indicated that the story point estimate can be valuable to the PM in terms of prioritizing. When they see a story with a high estimate that might cause them to lower its priority compared to other stories they can get delivered quicker. But seemingly defect fixing would have to factor into this somewhere too, and then wouldn't the same concept apply? If defects are not estimated, how can the time it will take to resolve the defect inform the decision making process?