Everybody knows that a tremendous latitude in church music is tolerated, practically speaking. Whether this is advisable is another thing, as I've tried to show. The argument for a minimalist approach to instrumentation arises from the liturgical points I've already mentioned: that liturgical worship is a vocal act and a communal act; and music is there to support that -- not to overwhelm or distract from it.
As percussion instruments, the same problem applies to guitars as with pianos: they require a rhythmic beat. Of course there are many fine hymns (as opposed to chant) and these have a rhythmic component. But is a strummed guitar really the best instrument to support a proper hymn? And once again, being a profane instrument, the very presence of the guitar is a gateway for inappropriate music in a pop idiom to smuggle itself into the church.
Mozart was a true genius, who composed much music that's truly sublime. But I'm wary of Mozart as well. For one thing, though a baptised Catholic, he was not a believer. If like me you believe that sacred art is not merely decoration -- an extra -- but organically linked to the liturgy, then you have to believe that only believers immersed in the life of the Church have the discernment and deep sacramental grasp of their role and what the Church is about necessary to produce something truly Catholic. Yes, Mozart was a fertile genious, but he was also a freemason and a notorious egotist. His religious music is thrilling and inventive, but those qualities are not necessarily what's wanted.
I believe that if Catholics had as much respect for art as they have for, say, a new car, they would examine it more closely and critically before deciding if it's quite what they need.
Your commentary is dead-on, but also calls for an understanding of the nature of Art--something sadly lacking in the US as a whole.
St. Pius X's observation that Art (especially for worship) must possess Beauty, Goodness, and Universality (truth, in a fashion) flies directly against the au courant "ars pro gratia artis" mentality.
As to the guitar--I think that a classical-guitar accompaniment of (e.g.) "Silent Night" can be used without danger of derogating substantially from the essentials--but my thesis is vigorously disputed by others who are quite knowledgeable on the topic. Frankly, I think this is one of those 'de gustibus' questions--but I share with you a very solid skepticism on use of guitars.
As to Mozart: pointing out his personal faith-problems as a 'bar' to utilizing his sacred music offerings has some danger, because one could then state that JSBach's Lutheranism is similar to your objection. I'm not so sure that Schubert was a really "good" Catholic, either. The list could go on...
That's why Pius X wrote his encyclicals on the topic of Musica Sacra--to get to the essentials of what is/is not appropriate as Sacred Music.
It is also important to distinguish between Sacred Music and hymns--they are two entirely different things and are treated as such by Pius X, for good reason. Strictly speaking, musica sacra is that music written for texts which are either Biblical (OT and NT) OR for the text of the Mass. Hymns fall under a somewhat relaxed standard, because, unlike Gregorian Chant propers (e.g.) hymns do not employ the standard calling for music which 'illuminates' the text. A hymn's melody, harmony, or rhythm may well evoke certain feelings, and that's the purpose of a hymn, along with the implicit catechesis in the text.