The experience would certainly be different. In ERG mode you are controlled by a program producing watts at a prescribed rate with no regard for the terrain. In sim mode you are being controlled by the gradient, quite the opposite experience.
My point is not that the experience is the same, my point is that your legs produce the proper amount of power to get up the hill in that amount of time, even if it is erg mode. With that in mind you must give credit for the elevation gain.
Your friend that did an over under workout up AdZ… if he had done that same workout producing the same power in sim mode wouldn’t you agree that he would get up the hill in the same amount of time as when the trainer was controlled by erg mode? If he was 10 minutes slower in sim mode then he pushed the pedals with less power, simple as that. The workout pushed him harder.
How do you know how much power others are putting out with out HR? Zwift displays live w/kg data but I dont even know where to go to see their weight live while riding. Then I would need to calculate the raw watts. I know there are a ton of people who can produce in excess of 4 w/kg and even quite a few in the 5 w/kg range for an hour. They are not 80kg riders making 400 W though, more like 65kg @ 5w/kg = 325W.
Lastly remember that Zwift has a giant pool of talent from around the entire world. People often forget this. People often forget that there quite a few pro cyclists that use Zwift. There are many Zwifters with a 400W FTP. You cannot compare it to your locals on Strava or from your region that ride outside. It is world wide on Zwift. That is a very big pool of talent to compare to. I honestly expect that every climb segment will have a KOM in the 5.4 w/kg range (or higher) and every sprint segment will be taken by someone who can hold 1200W. There really exists that talent on Zwift.
Lastly yes people cheat. In Zwift and everything else in life. I dont worry about it too much. If I spent my time chasing down those that dont use HR monitors, have fake data, etc I would have no time left to enjoy Zwift.