AFR misleading? Plugs tell a better story?

Well, yeah I did... :) Actually, I had been doing some research on the subject, and ended up coming to that conclusion on my own, and I called Innovate to verify. Oxygen sensors are designed to read in lambda, where stoich is labeled 1.0, and the gauge is then calibrated to convert lambda to the scale for straight gasoline.
That is basically correct.
Lamda is the way it is always interpreted. Those who use lambda don't need to consider what type of fuel it is. Those of us who are so used to working in AFR find that difficult so convert it to a 'typical' gasoline, 14.7:1. Is it exactly corect for any one gasoline? no.

Does it matter? Like you posted, no. The lamda or AFR is just a reference point, not some target. The only times we care about the value is to know its ballpark for the conditions, or when its targetted for emissions reasons. For example, in the late 60's Chrysler spec'd the AFR for the idle at 13.9:1 or so and then later to 14.2:1 to meet HC and CO targets at idle. AFR was determined using a CO sensor system - which is better measurement tool for stable conditions like idle.

@skidmark I wouldn't go nuts over differences in spark plug appearances over a wide range of conditions.
At idle, with an Air gap, and moderately low vacuum from the cam, it will be difficult to get really good fuel distribution.
If you did some tests at steady part throttle - look at the plugs, then at least you're looking at just one situation.
Then do the same for a hard wide open throttle run or runs.

When the factories did this, they either made changes to the intakes or they altered the carb boosters to direct fuel toward or away from cylinders as needed. You can see this latter technique used in the Direct Connection bulletins for carb setups for drag racing.