First, I don't like ERA for some reasons, but they are not the reason most guys don't like it. I think the way MLB assigns runs to a pitcher is wrongheaded, and I don't trust official scorers. So, technically, I do agree that it is possible for a 3.5 ERA guy to have pitched better than a 3.0 ERA guy over 100 IP's. However, it would be really easy to go over the runs scored in each game and see if that is true.
But I don't agree that a guy with a 3.5 ERA could have pitched better than a 3.0 ERA guy, if all the runs were accurately assigned to each pitcher. More importantly, I find it nearly impossible to argue that a pitcher with a 3.5 ERA has been one of the best pitchers in baseball.
The goal of playing the season is to get into the playoffs. A team does that by winning as many games as possible. So winning games is the ultimate goal. A team does this by scoring more runs in each game than they allow in each game. Period.
All that matters in this game is runs. And it doesn't matter how they are scored. The primary, nay, the sole goal of a pitcher, is to prevent runs from scoring. How well they do that is how we evaluate them. I don't care what park they pitch in, what defense they have behind them, what weather conditions they pitch in, who they pitch against, who was umping the game, how many lucky hits were hit against them, None of that matters. All that matters is how effective they were at preventing runs from being scored. That is their value to the team.
A good pitcher takes advantage of all those advantages, and decreases the effect of the disadvantages. Arroyo benefits from a good defense behind him, but if he's a good pitcher, he finds a way to pitch around a bad defense, if he has one. Same with ballpark, same with "lucky" hits.
To the point at hand.
Bailey has never been able to minimize the damage of the "lucky" hits against him over a full season. Despite good peripherals, he's never been able to lower his ERA below 3.5. Until he does, in my mind, he can never be considered one of the best pitchers in baseball, no matter how many K's he has, no matter how many no hitters he has.