That's very similar to what's discussed among Fila people. Show dogs, particularly in Brazil, are being bred to be easier to show, which means breeding out temperament and with it, the herding drive. (The Fila in show is not DQ'd if it does not allow the judge to touch it.) Some of the resulting dogs are beautiful and very sound, but it's NOT a true Fila Brasileiro.
Shiva's father was an imported show dog, but her mother is from working lines, and she does not have the classic aversion to strangers - ojeriza - of the old Fila. She does, however, have beautiful conformation, superb health, great intelligence and the essential Fila loyalty as exemplified in the Brazilian simile, "Faithful as a Fila." When she is bred, we will select a male with an extremely 'hard' temperament and great herding drive. The focus of a breeding like this is to end up with just one superlative puppy with the best of both parents. The other pups from a breeding like that should be very sound, good puppies, but you don't expect for them to be more than pet quality with a good work ethic.
The best Fila lines have been created that way, and it has been a process of bringing back a breed that was very nearly completely lost to neglect on one hand and very nearly destroyed by it's own popularity (in Brazil) on the other.
It sounds to me like you are on the same wavelength with your Papillons. Best of luck!