Interesting conversation... mostly.
First, cable/interconnects (C/I) can never make a system sound better, they can only prevent it from sounding worse.
C/I does two things, transfers a signal from A > B and damages it. The better the quality of the C/I, the less damage it does.
There are so many things going on electrically in C/I that it's a wonder any signal ever gets to the other end at all -- intrafiber capacitance, dielectric absorption, resistance of the metal itself, EMF induced noise and distortion... There is no doubt that better cable can make a difference. It is quantifiable and measurable.
This is mostly applicable to audio C/I, including speaker wire and any interconnects that use metal conductors.
Smooth metal is better than metal fibers. Air dielectric is better than polyvinyl. Silver is better than copper. Pure surface copper is better than long grain copper. And LGC is better than your standard zip cord or house wire. (Try 10g solid core household electrical wiring as speaker wire and you'll see what I mean. To keep the bass response solid you'll need to also use 14/12g stranded cable as well.)
As for digital cable... What does a microprocessor do when presented with a 4.5v signal? The idea that digital signals can not be distorted is not entirely accurate. It really isn't all or nothing. Processors are looking for 5.0v, but are programmed to try to figure it out if they don't get what they're looking for. Sometimes they make mistakes. If you don't believe me then I suppose you believe that all bank errors are caused by user error...
To speak to the optical cable debacle. Try reading a magazine through your Toslink. Can you do it? If you can't see through it, how good a job will it really do?! Think about it, it is supposed to transmit light. And yes, I have tried this and you can read through high quality optical cables. BTW, if you have the choice, high quality coax digital cables sound better than optical. There are two less conversion processes to go through and the technology has been around longer. (Denon pioneered the world’s first commercially available PCM recorder for regular studio recording in 1972)
As for video cables. Video is a delicate signal. Analog cables are more susceptible to induced distortion than digital cables. There is no perfect shielding. TV tuners will take what they get with analog and try to make a picture out of it. The more noise, the more snow, speckling and artifact you will see. Digital cables help, but again, refer to the graph above. Digital isn't perfect. The better the cable, the less damage done, the better the picture.
Just because a cable is more expensive, doesn't mean it's better. Look and see how it is made and of what it is made. If you are using pure copper video cables then you are doing considerable damage to the signal. Silver is much better for video because of the frequencies involved. Of course, gold connectors are better because silver will oxidize quicker than gold, but the inside of the cable should be air tight. Again, you have an electrical signal at very high frequency traveling down a conductor, thus -- intrafiber capacitance, dielectric absorption, resistance of the metal itself, EMF induced noise and distortion...
As for magnitude of improvement. Well, we are dealing with the most advanced electronic designs ever imagined. It's like comparing world-class athletes. The difference between the world record holder and the five guys who want to be him is 1/100 second. However, the amount of work and effort it takes to be him is a life-time. But, without the right stuff to begin with (genetics) a life-time isn't long enough to get there.
You don't get 2 times the picture/sound for twice the price. You get 2 times the picture/sound for 4 times the price; 3 times for 8, 4 times for 16, and so on. That's why the Focal-JMlabs Grande Utopias cost $80k/pr and the Nova Utopias only $38k/pr...
Just a little something to think about...