In the end, I think there are problems with both styles.
Skill use -> skill gain makes sense from a realism perspective. It also makes intuitive sense that finding opportunities to practice a skill without risk is a 'good' thing to do. In real life there is a lot of value in learning how to practice efficiently and quickly. Sadly, though, practicing can be boring both in real-life and in TES games. Maybe it's just something about my personality, but when I play TES games I feel compelled to do everything I can out-of-combat to prepare for future combat, such as obtaining wealth/gear, and crafting potions/enchantments, and most importantly skill-grinding on my "bottleneck" skills. I end up spending a rather small amount of my time actually exploring and I end up getting bored. Yes I realize it's my own fault.
A system built on experience points is by no means realistic. It doesn't really help immersion to run around "exploring" locations and then suddenly being better at casting spells, but I find that experience points motivate me far more to actually engage in dungeon delving or completing quests.
Of course, one thing that I feel is absolutely critical for either of these systems is to keep opponent levels static. I hate nothing more than feeling that every time I level up without also becoming distinctly more powerful I have somehow fallen behind the curve...
I agree with most of what you said. I get bored, not because I don't like grinding because I actually like it, but grinding in Skyrim is just so monotonous... I mean sure, it would be cool getting to a higher level of Alteration and get those cool high level spells, so to level it up I use it right? Well, I like my enemies dead asap, and it's much much faster(and funner) to just smash it's face with a mace than to cast Alteration spells, and then smash it's face with a mace. I guess I'll just cast Oakflesh 1000 times.
Immersion is cool, as long as it's fun. I say screw boring immersion inducing features, completing quests and leveling Smithing by 5 points out of the blue beats crafting hundreds of daggers any day of the week.