I thought I'd answer just one of your points, since the other answers answer the general question quite well, but have left this unaddressed.
"Ignoring the situation -- Yes, the standard goes on to say that this will have "unpredictable results", but that's not the same as the compiler inserting code (which I assume would be a prerequisite for, you know, nasal demons)."
A situation in which nasal demons could very reasonably be expected to occur with a sensible compiler, without the compiler inserting ANY code, would be the following:
if(!spawn_of_satan)
printf("Random debug value: %i\n", *x); // oops, null pointer deference
nasal_angels();
else
nasal_demons();
A compiler, if it can prove that that *x is a null pointer dereference, is perfectly entitled, as part of some optimisation, to say "OK, so I see that they've dereferenced a null pointer in this branch of the if. Therefore, as part of that branch I'm allowed to do anything. So I can therefore optimise to this:"
if(!spawn_of_satan)
nasal_demons();
else
nasal_demons();
"And from there, I can optimise to this:"
nasal_demons();
You can see how this sort of thing can in the right circumstances prove very useful for an optimising compiler, and yet cause disaster. I did see some examples a while back of cases where actually it IS important for optimisation to be able to optimise this sort of case. I might try to dig them out later when I have more time.
EDIT: One example that just came from the depths of my memory of such a case where it's useful for optimisation is where you very frequently check a pointer for being NULL (perhaps in inlined helper functions), even after having already dereferenced it and without having changed it. The optimising compiler can see that you've dereferenced it and so optimise out all the "is NULL" checks, since if you've dereferenced it and it IS null, anything is allowed to happen, including just not running the "is NULL" checks. I believe that similar arguments apply to other undefined behaviour.