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Picking up on a few points:

Also, if you have a collection of older models, conversion to DCC, while possible, is not as simple as just fitting a chip.

I shudder to think how long it would take to convert my 50+ three-rail Hornby Dublo locomotives to DCC. Life is too short to take on a project like that....
Whenever anyone raises the 'ad-quantum' argument (I've got 'too' many to convert, 'too' costly etc), I always encourage people to take a pragmatic look at their collections.

A three-rail HD layout represents models as they were many years ago, complete with all their functionality and usability. Effectively a 'nostalgia' museum layout.
DCC is all about increasing realism, something which can never be achieved with HD 3-rail, so why would one even want to convert it to DCC ?

You are quite right that converting HD 3-rail to DCC is not as simple as fitting a chip. Most of these locos collect power through the chassis block on one side and the centre studs for the other side. The motor was usually electrically connected/integral to the chassis block so the need to isolate it to have a decoder sit between it is virtually impossible.
Most HD locos are heavy current drawers, so you'd probably have a hard time finding a decoder capable of delivering the current required - they tend to be more expensive.

For those with large collections of more contemporary models, you need to realise that you don't need to convert everything and you don't have to do it 'right now'. Think about a phased approach:

  • Locos which fit your current prototype area/regional interests
  • Locos which fit your current prototype time-period interests
  • Locos that actually work
  • Locos that conform to your current modelling standard expectations
  • Locos that are actually worth converting

Once you apply the above criteria, you'll find that you won't have large numbers of locos to convert - you'll have a small selection of high-priority items. The rest can come later if required.

(as an aside, I am told that a momentary short circuit can shut down a DCC layout, which could be a problem with what happens to a three-rail pickup when the locomotive is negotiating pointwork, because the centre rail is at the same height as the running rails - you can see the ammeter needle jump for a fraction of a second every time a locomotive goes over a point - it's not a problem with analogue though - the sheer weight of the things keeps them going until they've passed over the offending rails)
It is true that a momentary short can shut down a DCC layout, however, there are reasons for this and there are mitigations which can be applied.
Most layouts I have seen have shorting problems due to poor wiring practice. A good start is to wire live frog turnouts properly: Live Frog Wiring - Model Railways On-Line
Mitigation can include separate 'districts' where multiple buses are used that are electrically isolated from each other, but NOT by using the dreaded 'lightbulb' solution. Addressing track laying and running qualities also helps to prevent derailments which can cause shorts.

I think the issue of 3 rail centre pickups brushing across rails when traversing turnouts is only an issue where a loco has two centre pickups (most of them do) and one touches a closure rail while the other touches a live rail, effectively shorting out. This supports the point of view that HD 3-rail is not worth converting - it was never designed for DCC and couldn't be expected to work with DCC. Enjoy it for what it is.
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