ANY electrical issue (smoke building in the cockpit, etc.) that requires immediate remedy warrants shutting down the electrical system with the master.
Just to clarify with respect to my experience with the smoking transponder, in that case it was obvious that the transponder was the source of the smoke and there was an easily accessible, clearly labeled breaker for it, so the pilot pulled the breaker. I would agree if there's smoke in the cockpit and it isn't immediately clear where it's coming from or there isn't a quick way to remove power from only the offending unit, the correct action is to kill the master switch.
If you are IFR you should be in an airplane that has alternate power back-ups so that master off should not be a problem.
Agree you should have something that can keep you from losing control of the aircraft after turning off the master. In the old days this was a vacuum gyro. Nowadays it's typically a standby instrument with its own built-in battery (and hopefully that battery isn't the source of the smoke!). But think about the situation where you're in IMC, you have smoke in the cockpit, so you hit the master switch. You're now hand flying on a small attitude display. You've lost com, transponder, GPS, moving map, IFR flight plan, autopilot, engine monitoring, etc. You don't want to be in that situation for any longer than you have to, and your chances of getting out of it alive are much better if you can get more of your panel back. If you have accessible breakers or power switches for all of your avionics, you can turn them all off and then turn the master back on. If the master alone starts making smoke again you've got no choice but to stay on your standby and any handheld backups (or try the E-bus if you have that architecture). Most likely turning the master back on doesn't make any smoke and then you can start turning the most essential equipment back on one thing at a time. This allows you to get some of your panel back in a methodical fashion and may also clarify the specific source of the smoke so you know what to leave off for the remainder of the flight.
In the same scenario if all you've got is fuses, after shutting off the master you'd have to pull out every fuse, turn the master back on, and then reinsert the fuses one at a time (making sure to get the correct size fuse in each slot). Much easier to work through this scenario with breakers or toggle switches.
With proper system design, a fuse can be pulled just as simply as a circuit breaker.
I partially agree. Maybe it depends on the specific brand of fuses and fuseblock, but I have sometimes found it difficult to grasp and pull a fuse located between two other fuses. For me pulling the CB is a bit easier, but the most important thing is accessibility and clear labeling (to your point about proper system design). There's a tendency to hide fuseblocks out of sight (because they aren't exactly beautiful to look at and you shouldn't need to change them in flight anyway...if a fuse opened, it's almost certainly for a good reason that should be addressed on the ground). The problem arises if you need to remove power from something and you're fumbling around under the panel to find the right fuse.
Example 2 doesn't seem like a good validation for the need for a circuit breaker either. If the power switch didn't turn off the smoking transponder then obviously there was some wiring problem. Adding a circuit breaker wouldn't by itself fix that. Was the insta?led fused actually sized correctly?
I don't know why turning off the power switch didn't stop the unit from smoking...it's possible that it would have and we just didn't wait long enough (whatever was smoldering inside would not immediately stop after turning off the switch on the unit). Regardless, many modern avionics units don't even have a physical on/off switch. My point about the CB is that it was an easy way to physically remove power from the transponder. You could also do this with a fuse IF it's easy to find, clearly labeled, and you can grasp it hard enough with your sweaty fingers to pull it out. A panel mounted CB or power switch is typically easier to turn off...and just as importantly, if you've had to turn off multiple LRUs (because you're unsure of the source of smoke) they are easier to use when restoring power than having to put the right size fuses back into the correct slot.