MOST IMPORTANTLY: when I hit the "tab" key I can have gEdit give me SPACES. Not TABS.

How is incorrectly encoding tabs as spaces an advantage?

I know this is probably a holy war, but I have a huge SPACE bar on my key, it's sole job is to insert spaces. I have a tiny little (by comparison) tab key which is supposed to insert tabs, anything else is surely broken behaviour?

I know this is probably a holy war, but I have a huge SPACE bar on my key, it's sole job is to insert spaces.

Precisely. If I want to indent/outdent an entire block of code, I prefer to select multiple lines all at once then press the "tab" key (or shift+tab) until the indentation for that block of lines is to my liking. If this behavior were somehow tied to the space bar, that would be weird.

How is incorrectly encoding tabs as spaces an advantage?

It is not that TAB character (that is equivalent to ascii 0x09) is being encoded as spaces, but think of it as binding the function of "inserting the appropriate number of spaces" to the TAB key.

At least in emacs, the functionality can be bound to any key that one prefers, not necessarily the TAB key.

The advantage is that a single keypress of TAB would indent the line as needed, instead of entering the correct number of multiple space characters.