Sounds like everything you could do with JACK years ago. Pulseaudio was written because... well... there is no good reason for pulseaudio to be written in the first place. Lennart simply didn't like JACK, or ESound, or aRts, or any of the other existing sound servers. It's the age old open source dilemma of rewriting from scratch what could otherwise be fixed in the existing systems..
I can only speak from my own personal experience, but at least in my case, ESD and Arts never really worked when trying combined non-native applications (E.g. KDE under GNOME or vice versa, let alone running OSS games/flash/etc under both) and as for JACK, well, tried it a couple of times, never really worked for me, dropped it.
Pulse marked the first time both me and the people around me can reliably mix multiple streams from different applications while getting expected results. (E.g. Mixing Amarok, skype, qemu running Windows VM w/ audio and a native Linux games that uses OSS)
Granted, both me and my friends/coworkers use Fedora which doubles as PulseAudio test-bed (which may be the reason to better out-of-the-box experience), but at least for us, PA simply, err, works?
The problem is that it got shoveled down the rest of our throats long before it was ready for public consumption, and without any real pressing need.
I fully agree, even though I understand Lennart's reasons for doing it (AKA KDE 4.0 release limbo).
Heck, I used to automatically remove PA as the first post install phase up-until Fedora ~8-9.
As I see it, PA had a rotten beginning and has improved tremendously since then but much like KDE 4.x, it still suffers from the bad reputation that trails it since the initial troubled release.
The irony is that a lot of people here praise Alsa... anyone that's old enough to remember the first years after the move from OSS to Alsa would easily remember that Alsa attracted more-or-less the same hateful reaction that PA now draws. ... One can only wonder what will be said on GNOME 3 and KDE 4 when GNOME 4 and KDE 5.0 will be released :)