Contents of the discussion section
I must say that I would have a hard time listing the pros of the first approach (separate results and discussion sections), because I don't like it and it doesn't fit my style of writing. My advice would be: if you can, write in the style that you like best, because that's how your writing will be most natural/readable/convincing.

However, the choice is not Manichaean as you make it sound. There exist a continuum between those two, because it mainly depends on what you call “results” and “discussion”. When I write for a journal that requires a strict “results then discussion” format, what I usually do is that I put most of my text in the results part, and leave some general overall discussion for the discussion part. Typically, it would given something like:


  Results
  
  
  First result. Discuss its implications.
  Second result. How it confirms result #1. Consistent with previous observations [ref].
  Third result. Again, some discussion of it.
  
  
  Discussion
  
  Altogether, what is the insight given by these results. It changes our view of this phenomenon somewhat. It is in line with work by X et al., but highlights some contradictions of Y’s model.


That's a bit “cheating”, but I've never been asked to reörganize any paper written in that way.