That is your right to hold your own opinion and I am expressing mine based on a 40 year interest in transport, almost as long as a passenger and a 23 year (so far) career in the bus industry including time working in a council transport department (with more in logistics before) so it is based on a some solid ground.
As others have said, you clearly aren't looking if you think that franchised or municipal buses don't get dirty but apart from that those operations tend to be urban and main road businesses where there is less road dirt but you are comparing them to rural operations in a semi-rural county where dirt can build up in minutes - some of the routes go down roads so narrow the bus has wheels in both gutters at the same time chucking up dirt all over all sides. I have seen pristine buses go out at 6am and by 9 they look like they haven't seen a bus wash in weeks on some of these routes. Also age comes from someone being prepared to pay for newer buses, it has always been the case that rural routes got older buses and it always will regardless of who owns or controls the network, they can't pay for new buses and as they are less intensive don't need them.
Also, as I said, the competition is less between bus operators (it exists on the ground infrequently now though does still exist in potential if you screw up too much though the artificial restrictions on the start-up costs I mentioned limit this more now) but between buses and other modes (owning a car, getting a lift, taxi, bikes, walking, trains etc) so narrowly focussing on just buses as a separate market misses this. Also my point was that people want to travel to the place they want to go, they aren't really bothered how they get there but will favour the best for them (which is where the convenience of the car makes it the target to aim at) but if you don't bother to provide that link then you lose them and in my experience councils are less prone to work with this. Often a council will work on you have a bus to Town A which has shops, colleges & employment so why would you want to go to Town B which is just the same but for the person in question Town B has what they want whilst Town A doesn't.
It would be lovely if everything could be seamless but unfortunately the real world creeps in and puts grit in the oil. If you prioritise multi-modal by targeting rail stations you will make the majority single-mode travel to the local centre less attractive as most railway stations in the UK aren't well located for the centre of the towns they serve. Just looking at the area of the east midlands I currently live in I'm not sure any of the rail stations are conveniently located for the actual town/city centre they serve. Often they are close enough to be acceptable for a train passenger to accept the walk but too far out to be acceptable to a more local bus passenger to accept as a reasonable point to be dropped off at.
If you only had multi-operator tickets it would not help early months revenue flow of a new business, just like concessionary fares it would take months to see that money flow from the shared revenue pool to any new operator - setting up the agreements, data flow systems and reimbursement rates often require you to provide some actual data of usage to start the process which you can't do until you start and then takes weeks or even months due to organisational delay to get an agreement. If you can last that initial period of no revenue it would mean revenue would rise faster, assuming revenue for multi-operator tickets is distributed from a shared pot, a lot of the schemes work on a "revenue lands where it falls" basis (which means you keep the revenue from any sales made yourself and accept other tickets - this often benefits the bigger operator as they have more access to passengers on average to be the trip that falls on them buying the season ticket). Also the point is that most fare payers have a job so they won't change how they travel immediately (if you are competing) and they certainly won't change their job based on a new route until it has been in for several months to allow them to consider. Retired people, with more time on their hands and a bus pass that means the trip costs them nothing, will try new things early just for a change of scene.
I lived and worked in Cardiff early in my career, as an enthusiast I would often use the Network Rider to explore the Valleys on my days off but as a Cardiff resident who worked in the city I had no need of such a ticket for my regular usage - I may not have even bothered buying an all-city ticket as I lived in Zone 2 and worked in Zone 1 so the cost difference for a few weekends may not have been justified for what I actually used. Even now, though my staff pass is valid on all city operators where I live if I didn't have that I probably wouldn't need a multi-operator season ticket so wouldn't want to pay extra for something I only use infrequently over one for my main travel needs from my home to the city centre.
Not necessarily saying it isn't a good thing to have these higher vehicle standard requirements but it has increased the cost of buses both new and later life by a significant degree which puts an artificial barrier into entry into the industry - that makes an artificial monopoly not a natural one.
That was part of my point - those old Merc minis were bullet proof so even an old one weren't breaking down whereas their equivalents now are unreliable as well as more expensive. Many of those were withdrawn due to accessibility demands not reliability issues. I also wasn't suggesting cutting corners, this was all legal and well resourced in my calculations just that when I entered the industry this was still possible. Many highly successful and well regarded operators of the early part of this century started in this way in the later 90's or early 2000's and moved onto greater quality as they established their operation - Western Greyhound, Norfolk Green, Grant Palmer, Centrebus/D&G etc. The other point is that without these operators the costs for everyone go up, these smaller start ups helped to keep the costs of council tenders down by being cheaper options. This means councils can't fund as much so more potential passengers have no bus because the council has to concentrate on fewer routes to keep those running.
I can't help feeling that you have a very rose-tinted view of what the bus industry was like before deregulation and privatisation and it was quite often god awful quite frankly. I am a little to young to really remember most of it, being born in the very late seventies, but my dad has many experiences of things like waiting 2 hours for a half-hourly prime interurban service run by an NBC subsidiary due to bus or driver shortage. There were some bright spots then, just as there are some bright spots now, and there were bad areas, as there are now, but you seem to cherry pick the best bits of the past and compare it to the worst bits of today.
No they didn't, most councils had very little to do with buses before deregulation, that probably only really applies to the PTEs as I suspect most municipals were run more separate than you may think and none of the county councils and few towns had any involvement in bus operation at all beyond providing some funding to some operators. One of the things deregulation did was to bring in a more formal mechanism for socially necessary but not profitable services giving the council more control over what they were spending their money on and what they were getting. In most of England and Wales the buses were provided by the National Bus Company and if you think Stagecoach or First are ruthless you should look up some of what NBC got up to. It was basically pay us what we think we need to keep the services going or we withdraw everything and when challenged did just that - north Cornwall & north Norfolk are both noted examples of where that was done in the late 70's/early 80's.
How do you propose funding that one, London achieved what it did by receiving more funding than the rest of the country got combined (they aren't on that now but they were when they did the big improvement drive and they are still benefitting from the growth that expenditure created) and Manchester has received a significant amount of funding from central government as they were setting up. That simply isn't available to everywhere else, the taxpayers won't pay it and the government don't have it. You may be able to dig out a bit more for a few other big cities but you will never manage it for every shire county and city at the same rate.