First faults must be eliminated...true, which is why alarm-only is not practical for most plants. Need to trip.

In my experience we had legendary problems with damage from failures BEFORE installing them. After going nearly 100% resistance grounding, we rarely have a lot of damage from equipment failures. When we do, the result is usually extremely spectacular because it is always either L-L or L-G-L. The "single phase" issue is generally a non-issue. You can't have 277 V lighting but you can still have 240/120 V transformers and they don't care if you don't have balanced current draw on the secondary side. Everything else (motors, transformers) are always balanced 3 phase anyways. Very small loads such as CPT's mounted in 480 V starter buckets might be single phase but they're not large enough to actually worry about them.

With high resistance grounding at least, you basically don't get arc flash faults with L-G faults of any appreciable amount. Since this accounts for an average of 90% of all faults, you are basically reducing the likelihood of an arc flash by a factor of 10. You don't get to reduce the arc flash incident energy (it actually increases slightly) but you can all but eliminate most of the events in the first place.