well fancy does not by atmosphere of restaurant=better tasting food.
While i don't dispute your roommates opinion my mom said food in chinatown tastes the same or better than in hk/china. Her reasoning all the good cooks flock to ny anyway.(cuz to make big, you have to make it in america)
i'll have to swing by chinatown and check out her theory
Its definitely not yet true for indian restaurants.
the other interesting thing about chinese food and my roommate - we were visiting seattle where his brother worked for microsoft - and we decided to go out for chinese food, and i said, great, i love sweet and sour chicken! and him and his brother and all their friends laughed at me, and said dude thats not chinese food. They said they'll take me to real chinese food. Went to chinatown in seattle, to some dive hidden away in an alley. Not a single white person around for miles, packed with chinese people speaking loudly in chinese and bantering with the chef. My friends ordered for me since there wasnt even an english language menu.
....and i hated it! lol!!!!!! Everything was really sour or really bitter, lol! My friends loved it, they couldnt get enough. But yea, apparently chinese cuisine is far more diverse and varied than "americanized" chinese restaurants would ever serve. (I wont even describe the horrendous dim sum plates that followed, carrying items out of some 19th century gothic curiosity cabinet).
For what its worth, i've also never seen a menu in manhattan that indians in india would consider 'normal fare'. I'm also pretty sure americans wouldnt like a lot of the stuff that most indians eat at every meal (especially the super-spicey stuff).
but diversity - there's no shortage of it, when it comes to veg. (its a far cry from salads!). Its only a question of making it available easily.
I also believe there is a huge market for "fusion" cuisine, and that we'll see more and more of that.