I imagine the argument is getting too technical for many of us. We need specific examples of real-world images of the sort photographers make (but of stationary subjects with constant lighting) comparing for example downsized D3X images with full size D3 images, or downsized 50D images with full size 40D images. The processing steps, resampling method and sharpening amounts should also be specified.
If the 50D image has been downsampled using 'bicubic sharper', which I also use when downsampling, then one might expect the downsampled 50D image to have slightly greater accutance than the full-size 40D image. If this proves to be the case, then there is no argument to be made that the 50D image still appears to be slightly noisier, since the whole purpose of the exercise is to trade resolution for lower noise. If the 50D image is still marginally sharper, but also marginally noisier, the trade-off is not complete.
I find the argument that one doesn't buy a camera with a higher pixel count in order to resample the images, disingenuous. One buys a camera to take photos, and the choice of presentation size of such images will depend on many factors such as the size one's printer can handle, the resolution of the projector or display, the degree of objectionable noise apparent if a high ISO was used, the extent of cropping required, and so on. Those who used the first 3mp DSLR that Canon produced (the D30), seemed to have been very happy with the quality of A4 size prints, and even A3 size prints, which of course involved very substantial upsampling. The work of many professionals using 39mp MFDBs will often end up being downsampled to a size suitable for magazine publications.
The lower the camera's pixel count, the more frequently images will be upsampled. The higher the camera's pixel count, the more frequently images will be downsampled.
I happen to be in the situation of owning both a 40D and 50D. Would there be any reason whatsoever, in any circumstances, for me to pick up the 40D instead of the 50D when going out shooting, apart from the trivial reason of being able to fit more images on the card? Is it really necessary for me to go to the trouble of making comparisons at various ISOs and waste ink and paper printing out the results?