Ok, materials are delayed so I have some time now.
I am not now or have I ever advocated type S over grout for ANY reason other than convenience. The ONLY bone I was picking was the comment that grout must be used...NOT MORTAR. While I absolutely agree that mortar in the form used to lay brick or block would not be acceptable, the exact same "souped up" type S is acceptable since it
a: completely fills the voids
b: has aggregate small enough not to impede the flow (3/8 or less)
c: ends up @ 2000psi (or darned near close, often over and if you're scared just add some more cement)
Those are the 3 specs that I have seen for grout. I know that grout doesn't need lime...that was never a reason that I gave. And YES mortar is much more expensive than grout, but if you already have too much block sand (I can get 10 yds of sand for the same price as 1 or 5 or 9 because of minimums) and if you are doing a job that will just take a few days and don't want to bring in and then take home a secondary mixer, type S mixed to a consistency of a thin milkshake will do what you need it to. Convenience
It probably won't surpass the specs by a mile but it should meet them. The grout is there for 2 reasons..to add strength and to "join" the rebar and the block or to allow them to work together and give the wall some tensile strength. Mortar as grout does both of these satisfactorily.
JBM brought up a good point. Mortar when it gets beyond a certain thickness (2" is a common number thrown out)it gets weak and can break but since the cores of the block are holding the mortar/grout together this isn't really a concern. There isn't a load applied directly to the grout, the grout is transferring load
Should type S rather than grout be used in highrise or earthquake or tornado applications...no, unless it's been engineered that way which is unlikely, but in normal residential and light commercial situations (single story loadbearing, partitions, infill between steel posts, firewall etc...) it will perform adequately.
As an aside. concretemasonry brought up wet soil. I redid a wall of a basement. 8" block, 8' high ZERO steel anywhere and backfilled with heavy clay soil 7' high. Also the cottage was actually built in a filled in sluiceway from an old mill, so it was in a depression and also very close to the water. It took 40 years for that grossly underbuilt wall to fail. I'm pretty sure that a 12" block wall with the cores filled with 5/8 or 3/4 bar and grouted with type S every 4' would have given that wall another 40 years or more, well within the accptable lifespan of residential construction. In fact I haven't seen a block foundation built before 1980 that had any steel or was thicker than 10" block...most are 8" Most are in acceptable condition for their age
let the barrage begin