Eric,(posted 8524 days ago)As far as I understood, you assume in your example that your negative is capable of keeping all the brightness range of a given scene perfectly, does not matter will it be developed normally, N-1 or N+1 (a pretty possible situation). If this my guess is correct, then your question rather should be: why people control the contrast via different film development mode, not via using different paper grades? And is there a difference at all between this two means?
My answer is: if the characteristic curves of film and paper were dead straight, there is no difference. But they are not straight: look at technical data sheets from films and paper manufacturers. The straighter is the combined curve (the whole system=film+paper), the closer is the image to the original scene (lets also assume we need a 'literal realty representation', no 'artistic deviations'). The papers grades #4 and #5 have the straightest curves, but 1) they emphasize the grain and scratches 2) to achieve the necessary low contrast in the negative you have to greatly pull the film. Thus the grades #3 and #2 seem to be the best candidates for the title of "normal" paper grade, and the negative contrast is to be matched with that contrast.
If I misunderstood your question, could you please be a bit more specific?
Best wishes. Andrey