Ray Byde
As an EM modeller, I would say that it depends on the wheel arrangement whether it is beter to re-whel / re-gaue or build a new chassis from a kit.
A short wheelbase loco such as a 0-4-0 or a 0-4-2 or even a 0-6-0 tank engine woud benefit from a kit-built chassis, built compensated. This is purely because it helps to cope beter with any track irregularities so all whels are in conact with the track at all times, which improves pick-up. Of course if your track is perfectly flat this doesn’t come into the equasion, but speaking personally, my track certainly isn’t perfect, and with these small locos compensation helps.
Tender locos and larger diesel locos run quite happily un-compensated and so a simple re-wheeling is perfectly adequate to ensure smooth running. It’s a mattter of horses for courses.
Briefly going back to the original post from Bob about whether it is worth kit producrs catering for EM and P4, surely the main diffeence would be in frame spacer width and diffferent wheel profiles? How hard is it to supply alternative spacers for each gauge?