I have a meeting with my LHW account manager next week. I will try to find out more about all your questions/remarks/issues.

Just a few remarks I can already point out:
- Virtuoso/FHR is now reciprocal. Meaning that you can still get LC points when booking a Virtuoso rate for instance but like Koen dc rightly stated: LC exclusive rates (if available) are always lower. Virtuoso rates are typically higher versus BAR and LC exclusive rates represent a discount versus BAR. Worst case you book BAR via LHW and you will get more or less the same benefits as under a Virtuoso rate (which is higher than BAR).
- LC is free since a few years. Some sort of watering down should be expected in that case. Also remember that these days LC is a spent driven program, in the past it was based on stays.
- LHW does work with prefered agents, albeit a bit in a more "hidden way". Per region/country they work with a selection called "best of the best". I can assure you that it can make a difference.