Oh thank you Sally for raising this topic for discussion. I haven't been able to formulate just what I think so have just kept quietly to myself.
We have never sponged, used AI, nor do we flush - we put the tups in to their breeding groups on April 1st, for one month, which seems to be the best natural time around here for grass growth in spring, avoiding the worst blizzards etc. We also lamb outdoors. This is totally appropriate for our specific needs and those of our breeds.
However, I can fully see that others live in different situations where sponging and AI are helpful, and maybe are even what allows them to keep livestock while maintaining an outside job.
A major point is - is the flock/herd etc being used to produce meat, or to produce breeding stock? If it's purely for meat, then I don't see a problem - you can pick and choose a sire from a breeder, to get meat animals with the characteristics the butcher wants. That is the final product so there is no effect on the gene pool.
My major concern has always been for the rare breeds. I don't think AI is greatly used in rare breed sheep, partly because so few tups have donated semen (they seem to really object to the teaser ewe, or at least the four tups we volunteered did - poor soul just didn't do it for them). The tups whose semen has been stored by the RBST were not chosen for their prize winning properties, but were simply a random selection of working, proven, registered tups. This is as it should be to my mind for a Primitive, unchanged breed although it wouldn't perhaps be appropriate for other types.
However, for cattle and pigs, where there are fewer individual animals, then AI can be a life saver. This is partly because it allows breeding without having to buy or hire a bull or boar of your own, with its consequent dangers, and partly because the sire can be carefully chosen to maintain genetic diversity in the national flock, not just your own, and this is vital to the survival of some rare breeds.
Some large commercially popular breeds such as Suffolks, developed a tendency to carry a particular defect (can't remember what) which was caused by too small a gene pool, and the practice of using one tup, or a number of closely related tups, on a large flock, thus drastically reducing genetic diversity, and concentrating a genetic problem in the breed. A balance has to be kept in these flocks between maintaining and improving the desired qualities of the sheep whilst maintaining a large enough gene pool for good health.
However, using semen from a single tup/bull/pig or group of clones, from a rarified top prizewinning line, in order to produce breeding males which fetch those amazing top prices, whilst being how it's done, makes me worry about what the next major consequence will be. Using a 'good' sire when your business depends on selling top quality meat animals or more breeding stock isn't the same as using a very restricted line.
The use of AI could be either a help or a disaster to the maintenance of genetic diversity, depending on whether semen from just one ram was used on the whole flock, or a selection of rams, ideally a different one per ewe. We tend to be laughed at for having tiny tupping groups, some even one to one, but this is the ideal for running the flock with maximum varied genetic characteristics, so producing the same effect using AI could work. I don't know what the system is for buying straws - whether you have them all from one sire, or you can mix and match.
Sponging alone is a slightly different matter to AI, as it's simply a way of synchronising lambing to suit producers other needs. I used to be very doubtful about the system, but now I think it's just changing times, and I can't see the harm in it (except perhaps leaving in a sponge for, what, ten days? In humans that can lead to toxic shock

)