You are right when you say no one is going to stand up next to a forty foot print. (Except maybe some of us here). In any case, big outdoor posters are lo res, sometimes only 3 or 4 meg.
It's mostly not about the megapixels for me.... As far as I know, no other portrait photographer in my town, can be bothered with Medium format, it's too hard/expensive. But...as a professional, I believe I have to have superior gear. The best available.
I use MF for the following reasons in our portrait studio....and this includes corporate portrait headshots for web images... often displayed at only 100pxls on web pages, and 40" prints.
1. I can see the subjects subtle expression changes of the person through the view finder. It's big and clear on the H5D. It's practically 3D compared to a full frame dslr, let alone a 2/3 size sensor.
2. Because of the big and bright viewfinder, I can focus manually when I want. It's quicker than auto focus in the studio. I don't miss the shot because the autofocus is searching.
3. It's been said many times... It slows me down and I get the shot in 3 rather 10 images.
4. Even though 90% of my work is Black and White, when I do colour, it's more accurate. It looks 'more right' from the start.
5. I can start work in 16bit 270meg files with gorgeous skin tones and smooth gradations. The images are more real and less electronic/artifacty. There's real detail to be seen.
6. The Bokeh is beautiful...even on mid range focal length lens. 80 - 120
6. Cropping into an image doesn't compromise quality much.
7. I will never be shooting someone who has a better camera than me:) It's damned impressive which means less reluctance with the credit card.
I used to shoot MF film for portrait. I recall printing some 8x10 negs and being amazed at the silky skin tones they reproduced compared to my 'small' Blad negs.
That's my slant on it.