I own a lot of S&W revolvers, have owned several hundred more over the years (yes, I do get carried away with my guns), and have also owned several Dan Wessons. The 686 is a high quality firearm, and those that I have owned have all been reliable and accurate. I have never owned a late model 686 with MIM parts or the lock, so I can't comment on them. All the Dan Wessons I have owned have been large frame guns (.44 Magnum and .445 Super Magnum), still have a .44 Mag DW. All were early DWs made in Monson, Mass. Dan Wesson went through several ownership changes over the years, and it is generally held amongst those knowledgeable in things Dan Wesson that the "Monson" guns are superior to the later guns made in different locations. I have never had one problem with a Dan Wesson, which is far more robust than an "equivalent" S&W (with a significant weight difference, as well). They have all exhibited exceptional accuracy. Now, when it comes to the "small frame" DWs, I don't have any practical experience, never having owned one. I can tell you that the small frame DWs came in at least three major variations, the earliest being the Model 12 (IIRC), then the 14, with the 15 being the last variation (the 15 was in production at Monson, then at the later locations). I recall that there were significant improvements to the 15 over the earlier models, but don't really remember them in detail, except that they reduced (but did not eliminate) the "ugly" factor, which was one of the most outstanding features of the early models (remember that song about being whacked by "the ugly stick?" Those early DWs are the embodiment of "the ugly stick"). I have enjoyed my DWs, but I would recommend that, unless you really study up on them, that you get a 686 (you should also do a lot of research to find the one that suits you, anyway). Parts are much more readily obtained for a S&W and almost all gunsmiths are knowledgeable about S&W revolvers, should it ever need repair, but parts for DWs can be difficult to locate, and finding a gunsmith qualified on them is also difficult. Usually, the DWs do not have quite as smooth an action as a S&W, athough they are capable of stellar accuracy, partly due to their tensioned barrel. The interchangeable barrel feature is nice, but, usually, one finds the barrel he likes best with the gun, and it stays on it most of the time. One other thing, resale is typically much easier, more rapid, and more lucrative with an S&W, as there is a larger market for them.
Oh, regarding not seeing a lot of DWs in police holsters - most departments issued weapons bought by the municipality, county or state, and those departments that authorized (or required) private purchase typically restricted the officer's choice to certain models of S&W, Colt or, in some instances, Ruger. DW was a small firm, and didn't have the funds to pursue approval with every individual agency across the country, especially when that approval was, typically, at the whim of the Chief, Sherrif, or whoever was in charge at the time. I have never heard of DWs breaking, unless they were fired repeatedly with hot loads that would blow a S&W to smithereens just from thinking about firing it. They are extremely strong guns, and their mechanisms are very robust. When long range pistol silhouette shooting was all the rage, Dan Wessons in .44 Mag and .445 Super Mag ruled that roost, because they were extremely accurate, and because they could regularly digest loads that were far too stout for other revolvers. I have no qualms about using mine in a defensive capacity, especially regarding reliability, the only drawback is that it is one heavy machine, far heavier than a Model 29, and not a lot of fun to lug around all day, and even more difficult to conceal. That is information from somebody who owns and loves S&Ws, and who also actually owns and shoots a DW (and who has owned several others, as well), rather than developing an opinion from hearsay, supposition and/or internet rumor. That being said, I recommend the 686 as your best choice.