I tend to agree with most of what you say in light of that everyone has their creative needs and budgets constraints, relative to performance compromises they're willing accept. The main weighted issue with this individual, and Stef T, is their looking for only one lens to start with. Before recommending a one "do it all" lens that will cover the widest use spectrum, one has to decide how soon will they purchase their second lens, what it might be and budget allocation. If it's 6 months to a year before they purchase the second lens, then a wider range, like the 17-85 might serve them better. But if it's within 6 months, personally, I'd bite the bullet and go for the 16-35. I find it a great walkaround lens on a 1.6x sensor also... even if I had a 24-70 I think the 16-35 would be mounted 70 percent of the time... I like it that much.
I initially wanted 3 lenses; the 10-22, 24-70L2.8 and the 70-200L 2.8 IS, but it went a bit beyond my budget as I wanted the IS on the 70-200. After a while I also realized that from a practical stand point (for me) 70 on the 24-70 is somewhat an overlap at 70 on the 70-200. Sure, it's nice to have, but considering budget constraints it's a luxury that considering my creative needs and applications isn't one that yields much practicality relative to where I alocate my dollars.
On the wide end, the 10-22 is a pretty cool and creative lens but from the samples I've seen tends to (as most extreme WAs) distort and soft on the wide side, and not enough tele at 22. Additionally, it won't support the D1 series when I upgrade and keep my 20D as a backup.
As for the 16-35 being soft comparing to the 17-40, I don't know, I've read mixed reviews cmparing these 2 lenses, including on this site. On the wide side the 17-40 was consistently softer in all the reviews I've read. I also prefer the 2.8 as I prefer to shoot with available light.
Regarding L and non-L quality issues, I've read tons of reviews on this site and others and understand that in many cases cost does not always constitute quality results within any one given set of, or individual, parameters or values. But if you read between the lines, in most reviews, the overall evaluation of a piece of glass does tend to conincide (most of the time) with it's cost. Doesn't mean twice the cost equals twice the performance, but my findings are that in overall performance there seems to be at least a slight edge to more expensive glass. The other factor not typically addressed in glass evalutations is; how does a middle grade line of lens' performance hold up 3 or 6 years down the road, relative to an L series? I shoot outdoors often (sometimes on boats) so the durability and environmental casing of a lens is part of my equation. But there are internal optical differences also.
I guess what I'm saying is that I'd rather start off with 2 (or even one) quality lenses (weighted on overall performance) as opposed to 3 or 4 of a mediocre or middle of the line. If I'm to chimp out on equipment, I'd spend less on the sensor (cam), as digicams are, to some degree, a throw-away item...we'll be upgrading that part of our equipment every few years. I consider the glass to be the long term investment and therefore would toss most of my bucks in that bucket. I've even considered Sigma and other 3rd party MFRs, some seem to perform very well in one specific area but fall far short in most others...I don't see that as money well spent at any cost, not to mention the durability and long term performance aspects.
Taking a step forward at 35 may not be adequate all the time, but I find that at 35 it seems to fill the majority of my needs. I was actually quite surprised how well it does fill the frame at 35. Of course, partially due to the 1.6x factor.
Obviously, that's just my opinion for my needs and objectives. Eventually, I'll probably fill the gap between the 35 and 70 with a prime which I think will compliment my needs and applications well.
Consequently, I'm very happy with the 16-35/2.8L and the 70-200/2.8L IS... they both perfomr flawlessy on the 20D with great results, and at this point I don't miss the 35 to 70 gap, as I thought I would.
One other issue, or preference, that I tend to disagree with most, is the complaint of big and heavy glass. My preference is for more mass or weight. Sound strange? Maybe, but consider this. I've spent most of my career as a video pro and in broadcast level production a light unit is undesireable (in certain instances we actually placed small sandbags on the cams, even when shoulder mounted) The obvious reason is stability and dampening of nay hand or body tremors. The more mass the more steady your shot will be. A larger lens will also have more contact with your hand to steady it. Maybe I'm the odball, but I find large, heavy lenses to be an asset, and a welcome characteristic as my hands are a bit larger that most.