When a laptop can simulate anything, the physicality of the interface is most of the attraction, so might as well go all the way...
In my design, I wouldn't say the state is hidden though—that's the point of having an indicator light with every parameter. The LED becomes the state visualization. So, write-wise, yes, it's overloaded, but read-wise it's not.
I'm just now realizing I didn't explain that well in the OP, lol. And really this is more of a budget-friendly approach, rather than a user-friendly approach. I'm trying to meet those half way...
They were famously hard to program. The DX7 in particular is known for basically being a preset machine because almost no one could figure out how to build patches with it.
Muscle memory is really important and it's hard for users to build a mental model of the internal architecture if the external architecture doesn't reflect it at all.