Agreed. Another factor for the transition to water-cooled was because horsepower sells cars. Put simply it's thermodynamics: there's only so much heat an air-cooled engine can dissipate before it self-destructs.
To expand on that a little: The air cooled heads could not dissipate enough heat to support a 4 valve per cylinder configuration and the noise and pollution goals could not be met with air cooling.
Sorry, but this is wrong. An air-cooled (technically oil cooled) car has no problem with the transfer of heat. Porsche themselves ran the 917/10k with a flat-12 air cooled twin turbo engine that could make 1000hp reliably.
The transition to water cooling in the 911 was done for noise and emissions purposes primarily. A side benefit for them was the ability to buy off-the-shelf HVAC componentry and not have to engineer a heating system based on exhaust heat exchange.
It's very easy to get equivalent horsepower out of an air-cooled engine than the current water cooled models. There are plenty of air-cooled turbos pushing 600hp, and the Singer Vehicle Design 911 engines are producing 400 hp based on the original air-cooled 911 engine.
It's also the gigantic whirring fan on air cooled engines that is removed with water cooled engines which lowers the noise down significantly.
One of the initial engine designs for the 911 was a twin-fan engine. Apparently it made such a racket that the porsche engineers nicknamed it 'the threshing machine' and Butzi Porsche canned it on the spot.
I don't think I've ever seen a water cooled engine that doesn't have a radiator fan (or two). Older ones are crank driven, these days they're electric.
Sure, and the crank driven fans have been replaced by much quieter variable speed electric fans as you noted. These are also more efficient as they can be switched off during highway driving. There are also the thermo-couple engine fans where the amount of fan-clutch engagement is driven by engine heat. My other car has one of these and sounds horrendous when driving in heavy traffic on hot days, but is mostly silent all the other times.
But the big difference between a Porsche air-cooling fan and a crank-driven engine fan is that a Porsche fan is overdriven and much larger (diameter and blades) than a typical water cooling fan which is typically under driven and has fewer blades.
True (heat kills engines) but of course heat is a function of efficiency, how much of the energy in the gasoline is converted into mechanical energy versus the amount of energy consumed. So more efficient engines heat can deliver the same horse power with less heat, or more horse power with the same heat.
That's true, but there are hard limits to the heat conversion efficiency of an otto-cycle internal combustion engine [1].
Given two engines, both optimally designed to approach those limits, air-cooling is not as practical or as efficient as water-cooling. This means that for a given displacement, you'll hit the boundaries of air-cooling before you will water-cooling. If you want to continue to increase your power for a given displacement, you have to find a way to dissipate the wasted heat energy. That leads you to water-cooling.
It's not that water cooling is that much more efficient, but that it scales more easily. With air-cooling, you have limited space around the cylinders for cooling fins. The head is particularly problematic because of the valve gear. With water-cooling, you can increase the dimensions of the radiator in three dimensions to improve heat dissipation capabilities.
