From what we've learned on this board from numerous Disney CMs, DME luggage is scanned (the DME tags have barcodes) at least 5 times between airport and resort room). In addition, the trucks they are transported on are tracked by GPS. It's a VERY reliable system, from the sum total of anecdotal reports we get here on DISboards. PERFECT? Well, no system is perfect, but I'm not aware of any reports of actual LOST luggage through DME.
As far as the lag between resort arrival and your luggage's arrival, just plan for it and you'll be fine. Most of the complaints we read here have to do with people who didn't do their homework and were shocked and angry that their luggage didn't make it to their room at the same time they did, and then felt like they had to sit around and wait for it. By the way, you never have to sit around and wait for it, because it gets delivered to the inside of your resort room whether you're in there or not (to me, that's the magical part of Disney's Magical Express).
If you use DME, go in knowing that you should pack a carry-on with what you'll need for your first few hours. I do this anywhere I fly, anyway, just in case the airline delays my luggage. It's just a smart way to travel. And although I'm not happy that ANYONE feels inconvenienced or angry, I sometimes snicker about the few posts I've read where people were livid that they had to change for a dinner ADR within 30 minutes of arrival and didn;t have their dinner clothes in a carry-on, or had a crisis because their toddler's diapers weren't in their carry-on. I mean, it's just safe and smart to take your immediate needs in a carry-on. Since I have always packed for flying this way anyway, the DME luggage lag didn't even make me blink.
When you go to a sit-down restaurant, you know there is a lag between the time you walk in and the time you are fed. You accept this as a trade-off for better food and nicer atmosphere than fast food or food court food. And since of course you know about the time lag between talking to the hostess and receiving your food, it's a perfectly normal part of the transaction that you don't resent and don't stress over. If you wanted immediate food, you knew to go elsewhere. Well, that's me and DME. I know what to expect, I accept it, and I prepare for it.
Those who aren't willing to wait for automatic luggage delivery, those who don't want to be on a bus with a bunch of strangers and their less than darling kids, have the wonderful options of paying for a towncar or taxi, or renting a car. Totally a personal decision for each of us to make.
DME isn't for everyone, but it's certainly for me!