I guess two lingering questions remain for me. It was mentioned that layer 0 was special, other than for block creation is there something else about layer 0 I'm not aware of?
Elements on layer 0 take on the layer attributes of the target layer when that file is inserted as a block, or xref'd. Layer 0 is also associated with layer defpoints, freezing one of them may cause issues with the other.
Let's look at your sample file, granted it is a very simple drawing but even there we can see some use for layers. You've gone to the trouble of changing the color of some elements (there are reasons to avoid that as well) that would have been just as easy or easier to change to a different layer. The first beauty of layers is presetting all the color, linetype, weight, plotability, etc. issues; any element placed on that layer automatically assumes those attributes. Changing any of those attributes in the layer definition will change all the elements on that layer. New objects can go from very bold to normal with the click of a single layer's color.
In more complex drawings, it may be easier to see/select a particular assembly with some layers turned off. Different aspects of an assembly can be shown in different viewports by controlling the visibility of certain layers differently in those viewports. Example: existing stuff that will be removed, existing room WITH that stuff removed, what the new stuff is, what new stuff looks like installed, all can exist in the same drawing, but be displayed in different viewports. For presentation drawings the ability to turn off annotation is a definte plus.
When you start XREF'ing a whole new view of layers will emerge (as will avoiding changing the color of elements to something other than BYLAYER)
Here is an image of one of our models, to effectively work on a model that size we employ XREFs extensively, but beyond that elements are separated into layers to help manipulate the model; each pipe is a different layer so that we can extract an iso based on layer, every level of steel is a different layer; equipment, handrail, grating and other elements are separated by level as well. We can view only the insulation, or fireproofing, or only the fireproofing above elevation 200', or only the cooling water piping, or only the cooling water return piping, or any combination of processes or elevations. BTW, in this particular image all the electrical and instrumentation is turned off.