[LDBoblo]

Well actually, numerous people have learned to read Chinese to high capacity and never actually learned to speak the language in any real form. In fact, this was common in the early 20th Century. Many of the more famous translators of Chinese literature and poetry into English, for example, could not speak Chinese worth a damn.

As far as grammar is concerned, many features are present in "proper" Mandarin, but are casually ignored. A good example of this is the difference between the present perfect and present perfect progressive tenses, which many foreigners incorrectly believe don't exist in Chinese, and most Chinese subsequently fail to notice as well.

And for Hanyu Pinyin's usability as a language replacement...there were some publications done entirely in pinyin with some degree of effectiveness, but solidarity is limited. Your example of Xi'an ignores the use of apostrophes that are conventionally used to distinguish the characters. Tones can also be represented over the dominant final, though I am too lazy to work them up.

In fact, I can write pretty decently in about 4 different methods of Chinese pinyin. Taipei's haphazard switch to Hanyu Pinyin for street names and such in recent years was the source of some mild controversy, and in no small way underscores the lack of support for replacement of characters.

Some of the established Sinologists I've spent time with openly admitted that in many ways the ever-present problem of Chinese identity depends largely on the state of its writing system, for better or for worse.

Personally I see characters and phonetic systems as tradeoffs of one another in the Chinese system. Phonetics are flawed due to the number of homophones, and characters are flawed for cognitive reasons. Neither is a great solution, though the written form is far more universal than spoken Mandarin. I've gotten by in locales with no Mandarin ability just by having a pen and a notepad...though admittedly I've also helped Chinese workers here in Taipei who could speak fine Putonghua but couldn't read much more than their name.

Nothing really amazing about the language, nor anything horrific. It's just a language with bumps and warts, simple and complex elements, just like any other.