Go see the Robert Frank exhibit at the National Gallery of Art to see beautiful 16x20s from 35 mm frames on a basic Leica rangefinder.
But no, Ralph Eugene Meatyard showed us nothing needs to be 'tack sharp' to be good. I've always achieved the results needed regardless of formats because one needs to use the correct tools for each unique photographic situation. If you are going to cover the D-Day invasion, you don't shoot with an 8x10 field camera. A quality medium format camera can't give you lens movements of a high end studio view camera.
So what do you mean by quality loss? James Nachtwey's body of work shot on 35 mm needs the graininess when printed large to convey the image's emotion. Ansel Adams work needs the seamlessness to convey his image's emotion.