Note the "rare situations" -- it's not useful when you make a typo, or a mistake.

:: Remember, a directory is treated as a :: regular file on unix filesystems.

Not sure about this; if you e.g. vi a directory, it will warn you that it isn't a "regular file".

:: I see no reason to correct tail's :: behavior. If you sit there and do `tail' on a directory all day long, :: then you've got problems. Surely, you might want to modifiy cat's :: behavior, because some poor unsuspecting user might get some ugly :: garbage printed to his terminal when he does 'cat' on a disk device.

So the best thing to do is to keep the current behaviour for tail et al, but make it accessible through a flag. Most of the time, that behaviour isn't desirable, hence it should only be invoked if you really need it.