Quote Originally Posted by Franglais
Diluting the developer gives you more acutance (apparent sharpness around edges) and increases shadow detail...
Exactly. The preferred method of film processing for photographic artists (at least fine art b&w) is to use high dilution developer, lower solution temperatures, and longer developing times.

This gives the most detailed (albeit somewhat flat) negative. You then use paper grade and print developer to adjust contrast to a more acceptable level.