Once you hit a certain level of small, I imagine operations decline a bit. I'm not sure how T scale trains are coupled but I'm pretty sure they're no good for switching puzzles.
It's true that you don't get quite the visual impact from the smaller scales. For film effects I'd definitely use a larger scale. I've seen convincing scenery in pretty much all scales, though. It gets more difficult the smaller you go, but it's still possible. You just have to get a bit more creative with what you use and change tactics a bit. (Natural-growth tree armatures are pretty much out for anything smaller than N, and for something like T scale I can see using something like tinted plaster to ballast the rails rather than individual stones.)
In a way, scale really influences the impact of a layout. A large scale layout is great for superdetailing everything, but not so great for huge mainline runs (unless you have loads of space). Small scale is great for long mainlines, but you won't have the same level of detail, mostly because it just wouldn't show up, and you'll have more difficulty when you do try to shoehorn small details in.
A Z scale layout of a trolley line, for instance, wouldn't be that effective imo, because none of the city detail would be visible even if you did manage to put it in. It would be like watching a car race with Google Earth. But a Z scale layout of a huge area (coal drags moving through mountains or something) would be quite effective. Perhaps nature just compresses better than large cities.
To get back to the original question, I think really small scale would be a lot of fun. But it's not for everyone or every situation. (Some people, as their eyes age, decide that HO is too small, and when your vision is that far gone, T scale is right out. If your Geep looks just like your pills, well, it's time to go up a few scales.) It depends on your vision, both in the literal sense and in the sense of what it is you like about model railroading.
