Then that is essentially tablature, not notation as we understand it currently, and thus completely irrelevant to what we've been talking about. We're talking about systems of rendering pitches, not directions for where to put your fingers. Apples and oranges.
No, it hasn't been the notational convention for hundreds of years. Perhaps it was once, and you could perhaps make a sensible argument for using it in select cases now, but it is far from standard.
I've been reading guitar music for over 50 years, and in my time I've read many, many classical guitar scores. Not a single one that required a low D has EVER written E and expected me to sound a D. Not one. Ever. Neither has any slack-key chart I've read, or any jazz piece either, for that matter. Hey, I haven't seen everything, and maybe there are scores that do that, but it most definitely is not the norm. At least not for guitar.
As one of a huge number of possible examples (look around measure 51), if I can manage to insert this file correctly....
Of course a note written as C might come off as a different concert pitch on different instruments, if they're transposing instruments. But the thing is, guitar has never been traditionally considered to be such an instrument, nor has bass. Current practice for most guitar music, at least over the past century or two, has been to write the concert pitches. I'm sure it's possible to find exceptions, but they are just that--exceptions--and notable precisely because they're departures from the norm, not the norm itself.