Great post! It covers most of the angst. I feel your pain, what ever it is. Meaning that all the responders, so far, have found something slightly different in your post to identify with. (most of course, related to the LITTLE SNOT.)
I'll skip all the stuff about "tripod hole photographers" and trophy pictures and even those annoying tour buses full of senior citizens who show up just when the light gets good to ruin your shot and heap irony on it by using disposible cameras. (not only have they ruined your shot, but they'll have nothing to show for it either.)
I think you're really touching on the purist vs. manipulation debate. Particularly with landscape photography, we're mostly trying to "romanticize" what we see, by shooting in warm light with saturated color film. As you point out digital makes this much easier for romantic portrature or landscape.
I disagree with your statement tha his picture is "better" than yours. It is probably more striking, not better. He has juxtaposed more (a greater number) of interesting elements into his picture, but it lacks the subtlety of your 8x10 shot. to the trained eye he either had the most serrendipitous friggin' moment of his photographic career, or his picture is fake. striking, but fake.
It reminds me of those articles about which 4 filters (I'm not exagerating) were placed in front of the camera lens to even the exposure, enhance the reds, eliminate the horizon line and BTW give everything a nice rosy glow. After a moment of envy, I realize that this really isn't the kind of picture I'd want to take, anyway.
I think you have to care about what you photograph (carrying an 8x10 shows you care) and realize that 90% of the viewers (including most editors, who are trying to sell magazines to those same viewers) will prefer digital guy's picture. I think it's very easy to fall into the trap of photographing what everyone says, "OOOH and AH" about. It's self reenforcing, i.e., I'll photograph more of the kinds of pictures people like when they see my pictures. As long as you're not photographing professionally, you should photograph for you.