A lot of thoughts have changed regarding audio advice compared to 'back in the day'. 'Back in the day' many were running expensive speakers with cheap little receivers believeing that amplification did not matter, the speakers were all that mattered.
You are right on the money regarding the law of diminishing returns, it kicks in earlier than many believe and hits hard. Yes, spending a lot more money usually gets you better sound. Whether it is worth the money to you or not depends on how much money you have and what other priorities you have in your life. It will be different for everybody, even different for the same people at different times.
For example, I upgraded for many, many years and had a system with a list price of over $120K. Due to economic and health issues, I have cut back greatly, my current system lists for around $20K. Is it as good as the $120K system? No. However, it does come a lot closer to it sonically than I care to admit. It certainly makes me think twice about upgraditis.
I have not heard the PH7, I have heard the PH5 and I have owned the ARC Ref 3 preamp, so I am familiar with the ARC house sound. I have heard Aesthetix gear, but I have not owned it, it does sound similar to ARC gear. From that side of the tracks (neutral tube gear), I've grown to appreciate the sound of VAC gear the most. These are all personal choices, and I could live happily with any of these brands.
Hey, in the end it is your money, and you can spend it anyway that you choose. If you believe that the cartridge is the most important part of the analog front end, go ahead and buy the Dynavector XV-1s, it certainly is a great cartridge.
Cheers,
John M.