You have treated the subject of equity ownership in privately held companies in a balanced way, although I sense some bias toward equity ownership. The subject is a little like motherhood -- who can be against it? However, equity ownership can be misleading to even sophisticated employees, and counterproductive to their long-term interests.
For example, giving stock to suppliers: What if the company wants to change suppliers? Is the supplier motivated by long-term relationships or get-rich-quick expectations? If the stock goes down, will the supplier's prices go up? What if the company never can or will go public? Substitute the word "employee" for "supplier" and it becomes easier to recognize the perils of unrealistic adulation of equity ownership.
Show me an effective leader, and I will show you loyalty and commitment with or without stock ownership. Employees excel because they operate in a challenging environment and are given the opportunity for personal growth. Before individuals accept stock, they had best run a discounted cash-flow analysis of the probable economic benefit they will derive from this very alluring incentive.