By that logic, because the diffraction limit of the human eye is orders of magnitude away from being able to image a star, we cannot see stars.

For resolution, the question might be better stated: Can you tell the difference between

   a)        **

and

   b)        * *

The two images have the same aggregate intensity, but different morphology.

The ancients played the same game as a vision test with stars:

http://en.wikipedia.org/wiki/Mizar_and_Alcor

That may be the case for you, but in vision research, people measure spatial acuity differently. For examples, see http://webvision.med.utah.edu/book/part-viii-gabac-receptors....

A main reason why your definition isn't used much is because it is highly dependent on the relative brightness of the dot and its background. You can see a dot that has a millionth of the area of an iPad pixel, as long as it radiates the same number of photons on your retina [edit, make that a thousandth or so. Something a million times as bright might kill the cell it lands on before it can send out a signal. http://www.displaymate.com/iPad_ShootOut_1.htm#Backlight_Pow... claims 7W for an ipad backlight; that's over 2W for a million pixels. You wouldn't want to shine a 2W laser into your eye. If you don't believe that, google 2W laser pointer on YouTube]

Landolt C's may be a bit tricky to get right on a web page, but you might try and code a staircase experiment (http://en.wikipedia.org/wiki/Psychophysics#Staircase_procedu...) with illiterate E's.