A great idea, and I look forward to hearing about the hidden gems I've missed. When my wife started DMing, I marked a few sections in my 1st edition DMG for her to read, especially Monsters and Organization (pp. 104-105), as extremely useful reads, even though we were not going to be playing 1st edition.
Yep. Most of us assumed everyone was trying for immersion. If you weren't, you might as well play the Dungeon! boardgame, or maybe a bit of chess. The entire point of RPGs was the sense of "You are there!". Or, at least, it was for everyone I played with. The argument between gamism and simulationism back then was primarily about finding the golden mean between too little detail making the game feel fake, and too much detail getting in the way of immersion.
The Game: Here Gygax does state that AD&D is intended to fall more into the "Game" school of thought than the "Realism-Simulationism" school. However, his definitions of these schools of thought seem a bit different than our modern usages. He stresses that AD&D does not endeavor to simulate any kind of hard reality, but that it is a game for enjoyment. Nowhere does immersion enter into his estimation of simulationism vs. gamism, and indeed quite a few times throughout the text he's very explicit that players should become immersed in their characters.