If you have everything hammering through one database you are talking about one transaction table having to deal with all transactions. Ditto the commands table.

Try reindexing a very large table. TEMPDB will be thrashed as well, if nothing else. I did find an article (which I can't find now I need it) that showed that indexes are less effective when they get more than 'n' levels deep.

Yes you can have the different distribution databases on different drives with obvious benefits but separate databases have at least got separate files. It's a myth that separate files get separate threads but you are dealing with far smaller files and each distribution database has fewer records to deal with.

We implemented the policy of distribution database per publisher policy and most of our replication woes just went away.

If you reindex a table then the table is locked briefly. What do you want to do, reindex a huge table locking it up for a relatively long length of time or a small table locking it briefly?