My father is one of the best keyboard players that never got any real success/notoriety from it...still plays music gigs and has always made good extra side money his entire life though...
Anyway, the point being, he tells me stories (he's 64 now) about when he was younger he did Hanon and technical work/scales all the time, for hours on end. Because when you are younger, you have nothing but time on your hands.
Anyway, he would work on pieces, learning all the "standards" and such also in addition to the technical work/exercises/scales.
The things is, they had technical competitions when he was younger as well as performing parts.
Today, you just don't hear of technical compeititions. Maybe they are out there, but it isn't spoken of on the forum, so I really don't know. I guess trying to make a grade in Piano is like a technical competition.
Anyway, the point is, you aren't going to get all the technique and develop the skill needed to do crazy scales and speed work by performing just pieces of music. Not going to happen. When in competition you are required to run through scales like your are preparing for an exam today and getting graded...you have to do scale/exercise work and build technique.
Furthermore, his hands and fingers are as fast as ever, he swears he is better today than ever playing and continues to work on technique and things (not exercises anymore though).
He has no ill effect from years of exercises and playing, no arthritis or pain in his hands, he can only reach an octave also, I can also only reach an octave. So, hand size is a consideration.
So, yes, it can be mindless and not sound so great...but it can have benefits depending on what you are trying to accomplish...so I think in the correct context, Hanon and exercises, scale practice has to be used and beneificial. There is nothing natural about playing the piano by the way, it is not ergonomically correct the way it was designed to match our bodies...so we are already trying to adapt to something physically that really isn't the best for us to begin with.
I think the exercise mentality and bashing today is a bit overrated. I don't use Hanon personally, that is soley because I want to learn pieces and play something I enjoy, and I am not 15..much older and time is valuable.
But, when learning a new piece, I figure out the Key, and scale, and I work on running through the scale with both hands, some chords etc...to gain the technique required/fingering that is comfortable for certain chords or arpeggio and embed in my mind what notes I am likely to play. Then I begin to work on the piece only after 15-20 mins. of getting the understanding of what key and notes I will be working with typically. I will then revisit the scale often during working on the piece to take a break from learning/memorizing and work on the technique again.
But, that is just me and how I approach things.
Cheers