It was more a marketing decision I think, as 112dB released like 5 more more plugins after cancelling the SP one. Although maybe that gentlemen was coding it solo.
Yeah I'd choose hardware every time if money and space were no consideration. But something like that Behringer wouldn't even match freeware plugins as far as pleasing sonic characteristics. Yes like you mentioned one is actual electrical processes occurring the other is an emulation of said processes. But Behringer gear that processes audio is generally total shit and known for being a noisy mess in many cases.
If you spend more on external processing then yeah totally you can get what we are discussing likely faster and easier than a plugin. Also that Behringer is only going to give you distortion and added harmonics (good things both), but a filter module would be equally as important.
If you can afford it there's stuff like OTO Biscuit and Moogerfroogers that will shame most plugins. Although if you're buying the top maybe 20% of VST/AU's the software.hardware gap is a lot less. So I feel the cream of the plugin world can replace hardware in the sense that in a mix you can't tell the difference and in isolation the sound is 90-95% there. So to me that is a substitute that gets to basically replacement status.
http://www.otomachines.com/biscuit.html
I would say they aren't a replacement more in the tactile sense and the standalone nature of hardware samplers and synths is just a different often superior experience. But to be clear I'm not arguing semantics, just illustrating how I love all the amazing options we have today.
My 50k of software, hardware and computers over the last 8 years would have cost me half a million dollars as all hardware back in the 80's when I first wanted to make beats.