I personally like to use the div as almost like a way to hedge my stock or go in deeper. If i feel that a recent run up to a little too much but not enough to sell my holding ill take the cash from the div. The same can be said on the opposite side, if its dropped a lot but not enough to consider buying more or has been steadily increasing ill let the div buy me some more shares. This avoids any transaction costs which for small investors can be a lot. It also allows for for to play a lot of tax games when you sell (assuming you held it for a long time) because you ill have purchased many shares at varying prices. So if your income is really high one year but you still want to sell you can sell the recent div purchases and have almost no capital gains. But if your income is low, you can sell the early ones and have huge capital gains but pay a lower rate.
I agree with you completely. Perhaps I did not phrase my question correctly. Reinvestment is timed to occur the day distribution scheduled. Arbitagers will run up the price the week before and sell to dividend reinvestors. Its not a big deal when distribution is small but can make a difference if large. With brokerage costs almost zero, why not choose your own dividend reinvestement. That is how I feel, if the dividend is small say 0.5% a quater I do not think it make a difference because arbitrager do not bother also.
If you do reinvest (doesn't have to be in the same investment), then you get the power of compounding, which is what has taken the Alerian index (^AMZX) from 100 in 1997 to 1520 today. None of this is MLP specific.