This doctor's blogpost and an email conversation with Fig got me on the subject, and I figured I might as well post my thoughts (cut and pasted from my email to Fig) here...
I really believe that most cases of "the baby wouldn't fit" c-sections are preventable. Women who are mobile, supported, and given whatever time they need don't typically end up with c-sections. My husband's sister delivered a 12 lb+ baby vaginally (at a birth center with a midwife). My mom's OB told her she wouldn't be able to deliver her children vaginally and wouldn't be able to breastfeed them either. She delivered all of us vaginally and breastfeed all of us too. Another woman I know got stuck at 5 centimeters or so, consulted with her doctor, and chose a c-section (it wasn't an emergency, there was no fetal distress, and the doctor gave her the choice to continue laboring if she wanted to). Each person will do what they do.
I do think that on very rare occasions a baby might be too big to come out. Here's one example. But I think doctors use the "too big" diagnosis far more frequently than is warranted... often because it's an easy out and women don't typically question it. Here's a good overview of some of the facts and misconceptions that I just found on a quick google search. A study I referenced in a previous Birth Faith post indicates that prenatal tests and diagnoses indicating that the baby is "too large" frequently lead to unnecessary c-sections and inductions without improving outcomes. Here's the original study's link.
But I'm convinced that most c-sections happen because something else (epidural, pitocin, lying down for extended periods of time, etc.) led to the distress or stalling of labor. There are certainly cases of genuine crisis when c-sections are warranted, and I wouldn't hesitate to let a doctor cut me open in those circumstances, but those crises are rare.
As far as the meconium in the doctor's example... meconium isn't generally a valid reason for c-section either. The medical establishment's own research indicates that: "Caesarean delivery does not improve the neonatal outcome when the amniotic fluid is meconium stained" (Journal of Obstetrics and Gynaecology 28(1): 56–59).
Doctors like to rattle off their expertise and claim they have science on their side (and sometimes it is), but it's hard to take them seriously when the research (published in their own medical journals) clearly contradicts them.
Have you delivered a large baby vaginally? Or have you given birth successfully through VBAC after a previous CPD (cephalo-pelvic disproportion) diagnosis and c-section? Were you one of those rare true cases of CPD? Please share your stories!