I agree with your assessment of tab and "shame"; if you can play and are having fun, and the band is better for it, then mission accomplished. The big shortfall with tab is when the player does not make the connection that 3-2-5 is a Cmaj chord and is incapable of communicating with the other band members because they only know where they are putting their fingers, not what they're playing. It is the player in the end that can make tab work very well in a group setting. I play with 1 guitarist who can't read, yet knows all sorts of complex chords and how to communicate it, so it works great. I work with another that if he doesn't have tab for anything beyond basic open and barre chords, he is truly lost, which is a shame, because he has a ton of potential, but hasn't "learned his fretboard" and the notes within a chord.In defence of tab... I've I been thinking recently that I shouldn't be ashamed to use tab. The thought came to me that a number 3 on a bottom line of tab is no worse representation of G than a blob on a line of a stave - if you know the fingerboard and don't need to share a score with other instruments.
Background: although I learnt the mechanics of reading notation, really I started with tab on guitar as an easy shortcut to learning songs. Then figuring out accordion parts by ear I used notation to write them down for my own use. But I still can't sightread. Now my favourite is probably a score with notation and tab.
The ideal would be to be able to sightread, no doubt. For this casual time-poor dabbler though, I'm thinking I might stick to tab and stop feeling bad about it...
And as for the comments about purely using a chart causes loss of feel, I agree and always think about a comment that my jazz instructor told me - "a transcription is merely a representation of what is played; it is not necessarily what is played" implying the timbre/feel dynamic. Danny Morris gave me similar feedback about the importance of your ears when he told me "you're playing what's written; close your eyes and play the feel." Playing with your eyes closed was a huge learning as it forces you to use your ears.