Hi, Trisha.
This seems like the typical discussion between a theorist and a practical man! I have my beige socks on today, by the way, Steve 😀.
We could debate this forever, but, from an engineering standpoint, the severe camber changes which come with swing axles reduce the levels of rear-tyre grip. Quite apart from debates over whether this is 'safe', reduced grip is seldom a good thing, which is why more recent designs have gone to twin wishbones or multi-link designs, with an aim, among others, of keeping the tyres perpendicular to the road.
The pre-WW2 racing designers who used swing axles did so because reliable CV joints were not available then and a beam axle or De Dion setup is not practical if the engine is mounted very close to the axle. I'm not sure what was Mercedes' rationale, but I would guess that they thought the benefits of reduced unsprung weight outweighed the handling disadvantages.
I recommend Reinhard Seiffert's excellent book An Miracle on 4 Wheels' for a deep examination of this whole subject.
Comments eagerly awaited!
Mike