Have you been to conferences? I'll admit I write in a niche (although a fairly large one) and attend primarily conferences in that niche. I've attended one leading conference for the past 15 year (and been on the faculty, etc). In recent years, talking with agents, they have all mentioned that the quality of attendee is so high that they find themselves with too many good choices. These agents (and editors) would completely disagree that the quality of what they see at that conference is "no better than the writers sitting on their butts at home." If you read any number of agent blogs, I bet you'd find that sentiment expressed. There is a general consensus that it DOES make a difference when someone takes their work seriously enough to pay money to show up to learn from industry pro's, take that to heart, apply it, and then meet with an agent or editor about it. You're right, it is a numbers game, and the numbers favor those who take some extra steps/put in extra effort to make their work the best it can be.
And if their livelihood depended completely upon the slush pile, then there wouldn't be agencies, such as there are, who only take new clients by referral or invitation (those invitations being extended after meeting at a conference or trade show, or, to a lesser degree, achieving notariety of some sort).
We can agree to disagree. I disagree with your foundational premise that slush piles are where the predominant number of "diamonds" reside.
It would be interesting to get the resident agents to weigh in on this.
Yeah...we need some agents to weigh in on this. Anyway, my feeling is that there are a lot of very determined writers who, for whatever reason, aren't very good. These writers are just as likely to turn up at a conference because they do in fact take themselves very seriously. Look, the conference is appealing because it seems like a possible good alternative to the ugliness of slush. But in my opinion, the numbers are just too small to make it a viable alternative. Otherwise, agents would be closing the submission doors for good and just attending conferences. I don't see that happening. Do you? I'm sure some agents trawl the conferences and the web for writer blogs, but it's just a side deal. There are plenty of serious, talented writers who can't travel to conferences for whatever reasons. Can agents afford to brush them off? In my view, hell no. Neither can editors.
This idea of finding new blood at conferences only, and shutting down the slush piles, is old and crusty. Writers conferences aren't new. They've been around for ages. So why didn't the slush pile die back in the 80s or 90s? Or five years ago? Heck, the Internet has been going strong for years now. But the slush piles are still open--and not just among agents. There are plenty of publishing houses that still allow unsolicited manuscripts as well.