So could you say that as long as we get smooth gradations in shadow areas (with the help of some dithering) we are better off with a little more ISO?
More the opposite. Once you get smooth gradations in the shadows, stop turning up the ISO. That is, if you're using modern Sonys and Nikons. With Canons, there is often a benefit to increased ISO, although, as you point out, stop when the camera starts to apply digital gain; you can do that better in post.
I see above that you're photographing aurorae (sp? auroras? aurori?). That puts a different spin on it. You'll probably want to minimize read noise, 'cause, unless there's a lot of light pollution, that's what you're going to see in the background. Median filtering may be your friend here, especially since auroras aren't sharp-edged.
If you tell me what camera you're using, I may have tested it, and I can give more specific advice.
Jim,