During a talk I mentioned in passing Borel's result that for $G$ a connected Lie group, $H^*(BG;\mathbb Q)$ is a polynomial ring. An audience member corrected me in very short order that no, it's in fact a power series ring. I responded that while that statement would follow from a common alternate definition of cohomology, for our limited computational purposes in the rest of the talk the standard Hatcher definition
$$H^* X := \bigoplus H^n X$$
would be unproblematic.
The response was that no, that was still wrong. As this question dragged on, and I ceased being able to imagine the other audience members were still listening, I panicked a bit and came to the somewhat credibility-damaging compromise that my interlocutor could mentally interpose a second pair of brackets whenever we faced a polynomial ring in the sequel. (He was quieted but unappeased.)
1. What does the definition $H^*X := \prod H^n X$ gain us? The examples I know are being able to define the Chern character $K^* \to H^*(-;\mathbb Q)$ and in general the first Chern class for complex-oriented cohomology theories, but I'm hoping for some overarching, systematic, moral reason.
2. What are some real errors produced by $H^* X := \bigoplus H^n X$, such that this gentleman would regard it not as a sometimes-less-convenient convention but a blatant falsehood?
3. Is there any advantage, on the other hand, to retaining the direct sum definition?
4. One encounters as well the convention that a graded ring $A$ is a sequence $(A_n)_{n \in \mathbb Z}$ of abelian groups and bilinear maps $A_m \times A_n \to A_{m+n}$ meeting a list of conditions. Is there a strong reason to prefer this over the direct sum definition, other than to eliminate the question "What is the degree of $0$?"?