Does encrypting an Android device add any real security benefit over a key-lock?
Decrypting the device and bypassing the lock mechanism are completely different things. The request for the PIN code/password in the standard lock screen occurs AFTER the device has booted. It is possible bypass it by gaining indirect access to the already available data. And bypassing the lockscreen password is relatively easy.
With encryption enabled, it occurs BEFORE the boot and there is NO data that can be obtained without getting the actual key. There is no bypass there, except extracting the key from you by physical force... (An obvious assumption here is that the actual encryption mechanism/software does not have obvious bugs, but this assumtion undermines ANY discussion on security whatsoever, so I'm not taking it into account).
Your phone may have an external SD Card with lots of data on it (like mine). Encryption will protect it if the phone is lost, since ejecting it and trying to mount it elsewhere will fail. That's not a "forensic-level" attack.