Absolutely correct -- except for the "obvious" part. It's not obvious at all; it's actually highly unusual, by world standards. Our legislature (both Houses!) is "transformative," but mostly what you see in the world are legislatures that have only a few main active functions: electing the government, ratifying what the government does, and (if things go wrong) kicking out the government. Individual members of those legislatures don't write laws -- they generally don't draft amendments, or negotiate the fine points. Instead, members of the government (who are, most systems, technically members of parliament but function more or less similarly to our Department Secretaries) decide on a policy, and then have the bureaucrats write the laws to enact those policies. Negotiations that take place in such systems tend to be directly between group elites and the government. They do not involve individual members of the legislature.
In theory, that's obvious. Bills don't come from the Bill Fairy. They come from senators and congressmen. But watching it up close is really striking. Kent Conrad spends a weekend chatting with his staff and suddenly co-ops are on the agenda. John Kerry's staff finds something like the excise tax proposal in an old document from 1994 and suddenly that's how the Senate Finance Committee is funding health-care reform...This is how bills get made. Congressmen don't simply act as vessels for existing ideas that have a broad level of elite consensus. Fairly frequently, they -- or their staffs, or their lobbyist contacts, or their policy advisers -- simply have a new idea, and within a week or two, that idea becomes central to the process.
The virtues of the systems that the rest of the world have is that they tend to be more systematic and more professional. You wouldn't get something like Kent Conrad misreading a book and deciding that French health care is a perfect example of the value of co-ops, or whatever it was he thought he understood, and then all of a sudden everyone has to deal with that.
The virtues of the American system are that it tends to be far more open and decentralized, and it is far less bureaucratic. A lot of people are close enough or can get close enough to one of the 535 Members of Congress that they can have some input (well, actually, while all 100 Senators are relevant and close to equal, far fewer Members of the House are potential authors of any particular bill, with majority party status and committee position both large factors). In my view, that makes it more democratic.
The other major issue raised is majoritarianism. The type of system in which Conrad, Kerry, Olympia Snowe, Max Baucus, Ron Wyden, Henry Waxman, and perhaps dozens of other Members of Congress can all write bits of the health care bill tends to be strongly anti-majoritarian, whereas the way most other democracies do things tends to be strongly majoritarian. Each has its supporters (and perhaps different systems are better suited for different polities). I'll consistently take an anti-majoritarian position, so I'm pretty happy with what Ezra notices. In my view, a transformative Congress with individual Members of Congress having real independent ability to affect policy is one of the hallmarks of American democracy, one of the things that makes the U.S. "really" democratic.
(Update: I forgot to mention one excellent study of which Members of Congress have mattered, and how -- David Mayhew's America's Congress: Actions in the Public Sphere, James Madison through Newt Gingrich).