YXCapt,
Some very astute observations from you.
To clarify your queries, I was using Vy as there were no significant obstacles in the area in which I was operating...the oz outback. Trees were fairly insignificant too.
I agree with you 100% to try and limit the operations into such strips. Fortunately the medics I used to fly were aware of the fact that whilst it would have been legal to operate into there at max weight, it was downright scary, and they were happy to limit payloads to 4 adult pob max.
The idea of retracting the flaps at the earliest safe opportunity is to reduce drag to allow a maximum Vy. The performance of said aircraft from which I can recall had minimal sink with flap retraction when it was retracted approaching Vy, which was about when positive rate of climb could be established and identified with said technique.
I agree with your penultimate paragraph, but having said that, discussions such as this serve to have a better understanding of things and better understand the physics behind our ideas.
As for your final paragraph, I have had the privilege of watching the Bob Hoover display no less than 4 times, and now that I fly 900+ hours a year in them, I have an even greater appreciation for the man's abilities.