What I was getting at was the two-wire circuit on an outdoor outlet. I'm not sure that NEC allows that, even with a GFCI.
I know I wouldn't want to be holding (for example) a three-wire electric drill out there during an insulation failure.
See above. The GFCI may not need it, but the hapless holder of a failed appliance might.
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I suppose that depends on whether the GFCI works.
While I agree with you 100%, this statement seems a bit misleading. The point of the GFCI is that it will trip if you were to touch that failed appliance and provided a path to ground. It might not be pleasant but you'd probably still be alive to realize it wasn't terribly pleasant. :)
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I'd recommend retrofitting GFCI outlets at the beginning of all of your outlet circuits, grounded or not. The only exception would be for circuits where a nuisance trip might drop power to a fridge.
A GFCI saved my butt. I had reached behind the fridge to shoo our pet rabbit out and hit the power cord she'd been chewing. I was standing on concrete barefoot. Everything went black for a split second and I heard the GFCI pop on the other side of the room. My arm was aching for about an hour.
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