Would I buy a $500.00 rod, yes I have and still would if I felt it was something I really wanted.
Is it better then the less expensive rods, I think that is up to the end user to decide. Since they are the one that purchased and are using it, their opinion is really the only one that matters.

I'm a self admitted gear whore, especxially when it comes to fly rods.
I'm now at a point in my life where I actually have more gear then I really need. Having six 6 wts might tell you a bit about my gear addiction.

I still find high end stuff I want, but I rarely buy anything new at retail.
I either buy it used for half the price or less or wait till it is discontinued and on close out. I'll also generally sell something to help fund the next purchase.
My last purchase was a rod that retailed for close to $700.00. I bought a very lightly one used for $300.00. I sold a rod I rhardly ever used for $200.00, so my net out of pocket was $100.00.
There is a glut of great high end used rods out there if you know where to look for them.
SF