Mostyn, I'm NOT one of your "skilled river and stream Dry-fly-only-Anglers", although I fish rivers 100% and dry-fly 90% of the time.
Your first situation sounds like an exact description of the Tirino, a chalkstream that I fish a lot (pics below).
Successful flies have been the tried and trusted Parachute Adams, Klinkhamer (mostly olive),Elk-hair and CDC, Once and Away, CDC Hare's Ear, Parachute PT, sizes 12-18. I find that once you get the size right, practically any of the above flies will work since trout in chalkstream are used to seeing different insects on the water all at once.
My tippet is either GTM Stroft 0.14mm or Maxima Ultragreen 0.17mm, about 2-3' tied to a 4-5' furled leader.
I usually fish the Tirino either with my Granger Aristocrat 8' 5wt or an Orvis 99 7' 5wt, simply because I always have to contend with a downstream wind in the afternoons, making lighter lines a struggle.
Presentation is upstream at varying angles to sighted fish -- I don't blind-cast on the Tirino because here you can SEE the fish. I almost always start with a size 12 or 14, going down in size if the fish do the classic rise and refusal turn.
Thus far I've usually been able to raise at least a fish or two, haven't actually had a situation where nothing worked!
Like I said above, the thing about a chalkstream is that there's always something or other hatching, and like you've discovered, when the fish are fixated on black dots, it gets difficult. I've had some success with size 20-22 black knotted midges on 0.10 or 0.12mm tippet, but I hate fishing this way, so I usually don't bother.
To answer your last question: I'd leave the fish in peace! Having said that though, I've sometimes been tempted into drifting a fly downstream to them, using the little orange braided loop connector as a rough indicator (I use Moser-type micro loops) for where my fly should be, and striking when I see hesitation, although sometimes the take is so splashy and confident the fish practically hooks itself. In any case, the smallest fly I fish is a size 22, any smaller and I'd be wasting too much time trying to tie the thing onto the tippet!
To end, I think drag control is more important than the size of the tippet -- once the tippet is well de-greased and sunk, drag is the main factor determining whether a fish will at least take a look at the fly or not.
Thanks for reading, I know I've been rather long-winded, but chalkstream fishing just fascinates me!
regards,
Kenneth