I agree with your thinking 100%.
BUT, I'm thinking of all the guys using Arduino controllers that sense block occupancy using insulated rail. There too you'd think you could "just" hook up the insulated rail trigger to the Arduino input...ground/common being logic 0 and all. But every Arduino interface I've seen uses an optical isolator or similar to protect the "sensitive" digital electronics from the nastiness of O-gauge track power - TVS suppressors being a case in point.
