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Does anybody really need more than 500 watts?

Certainly. Many outdoor gigs, especially for low end heavier music.
...and assuming you have the cabs to handle it. Outdoor performance is the easiest place IME to inadvertently try and make up for "not enough speakers" by assuming more power and more low EQ will work just as well. High volume and deep voicing are usually most safely produced by a combination of cabs/speakers such that an amp is running below their limitations and still in its clean region.
 
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