Encounter level 1 for 5 PCs is 500 xp of monsters. A perfectly reasonable encounter would be a Hobgoblin Soldier + 2 Hobgoblin Minions + 2 goblin skirmishers + 2 Goblin Cutters(minions) = 501 XP.
As a 1st level character, you're expected to be able to fight n+2 monsters who are not solos in standard fights - heck, you're supposed to be able to fight n+5 monsters in hard fights.
Perhaps that's the reason you're so enthralled by damage vs to hit - you've been softballing during your playtests...
Considering that I'm playing in two campaigns, observing a third, playtesting against different sorts of opponents, and obviously calculating things like DPR, no that's actually not the case.
Actually one of the main tests I ran were different level 1 Paladins against a level 6 Cave Bear with an AC of 20. The STR Pals were able to do a lot more damage to them before getting killed than the CHA Pals, fwiw, although that's a different topic.
You are of course right that a 1st level character can face AC of 20 (or a bit higher) if the DM wants him to, and there are fair opponents that will be at that level. It's not a common opponent, though. There will be a lot more cases where the +1 to damage at first level is better than the +1 to hit (for a Paladin, at least, which is what the original discussion revolved around). Granted, to be clearer and more correct, I should have said "the overwhelming majority of level-appropriate opponents," rather than "all."
Of course, it's situational, though. Something like power attack is better against lower AC opponents than higher AC opponents, which was close to your original point--obviously true.
However, you incorrectly implied that vs an AC 20 Hobgoblin soldier, +1 to hit is better than +1 to damage, and you implied that this was clearly the case. In reality, it's about equal, depending on all of your stats, weapons, etc. I also overstated my case a bit to begin with.