You are demonstrating a lack of knowledge of basic physics and RF engineering. Yes, software can help to a point. The fact that UMTS uses a CDMA air interface also helps a great deal. But if the cell phone's antenna is detuned, the receiver's ability pick up, filter out from background noise, and amplify the base station's signal is drastically reduced. If the receiver isn't capable of supplying the digital signal processor an input signal from which accurate 1/0 decisions can be made, it's a moot point how good the software is. GIGO.
Then there are all the issues with closed-loop power control and output power of the cell phone's transmitter through a detuned antenna
Yeck.
But you are displaying a lack of knowledge of what is actually going on.
As are all of us. Myself included.
Is the actual signal being degraded? No one can know for sure. Even the "tests" can't know for sure because the signal that the phone reports (even the decibel readings) are produced by software, software in the phone...
And: no one knows exactly what Apple is doing with the new radio basebands. We have reports that they are dynamically switching frequencies from the 800Mhz ranges to the 1900Mhz ranges as the phone tries to lock the most reliable signal. Some of the earliest comments from Apple engineers (and those comments which have disappeared by the way) is that the problem lies in when the antenna are bridged the resulting attenuation confuses the processor which causes a lag in the frequency switch - which should not be there - and then it loses track of it's signal.
My whole point, which you are ignoring, is that WE DON'T KNOW.
So no one can say whether it can be solved or can't be solved with software. No one knows if it is a 100% hardware issue. In fact, I guarantee that this phone is not the first place that software has had to deal with signal degradation or interference or other "physical" aspects and hardware limitations.
Every year someone says that you can't do something because of the laws of physics then the next year someone does it. I remember reading a decade ago about how the RF spectrum was full and we were going to run out of signal space. Yet here we are with 2G, 2.5G, 3G and 4G and we now have 802.11a,b,n wifi and we have Satellite internet and GPS and Digital TV and WiMax and all sorts of other things going over the air. I remember when Cable lines had reached their maximum data speeds and now I have a connection to my house over cable that was deemed impossible a decade ago. It happens over and over.
None of us have access to the raw data of what is happening in the iPhone 4. We can "test" all we want with off-the-shelf models, but we don't have source code, and we don't have detailed diagnostics. We are all just armchair quarterbacks.
I have plenty of knowledge of basic physics and RF engineering. What I don't have is detailed data on what is actually happening to the signal after we touch the magic corner.