Nice thread, Chris. I just had this same discussion with a new co-worker on friday and we had differing opinions. Here's my take on it.
On ips water line connections I use Hercules Megaloc. First, 2 or 3 wraps with teflon tape, then the dope. I always try to leave the first one or two threads with nothing on them to keep the tape/dope from being pulled into the flow and boogering-up any screens or appurtenances downstream.
Note: I apply the "first two threads" rule to gas lines also, since the sealants could also affect gas regulators and control valves.
On gas lines I use Rectorseal 5 for new installs 1" and below. If the fittings have already been 'worked' (had pipe in them) I will use the tape/dope combo with Megaloc to get a good seal.
On gas lines over 1" I use Hercules Block sealant. It has the consistency of acrylic paint and cannot be wiped to clean up the fitting (it just smears...like acrylic paint) but gives a great seal for big jobs where re-do's could cost time and money.
Density of ptfe tapes, in my opinion, are a matter for manufacturers. Some may say that white, yellow, pink and green are for specific jobs. I believe that the installer knows what works best for him/her through their experience.
I've had my fare share of heated debates and code battles at supply house counters, but my experiences and results are the best proof.
I also profess to others that "every day is a day to learn something new". So, I welcome more comments to see if I'm on the right track, too.