This is true, and we're reliant on the reviewers being in touch with reality, which I gather is not always the case, though in my (limited) experience it has been. Writing proposals does feel different than writing papers and I do worry about getting too divorced from reality. I endeavor to stick to nonfiction!

The slowing of the feedback loop is only necessary if you wish to fund your work from sources that require it. Self funding through other means would have advantages.