The problem one has in comparing scopes is that no one ever counts the costs of misses, and failures to pick up a good shooting sight picture after having put the binoculars down. There is also a potential failure to spot other varmints a cheaper scope (while shooting the current varmint) that would be seen in a scope with better contrast, less flare etc. I agree that there is a point of diminishing returns, but to some extent that also depends on the accuracy of the rifle used. Obviously a $1200 scope on a cheap rifle is a waste, because even on a good day, the rifle can't get the accuracy the scope can see.
If we can allow that a box of .17HMR costs $8 that's .16 a shot. Doesn't sound like much. But if you were on a ranch like I was last week, where you may make literally 500+ shots a day, misses etc. can really add up. If you have a cheap scope that leads to missing 10%, failure to get a sight picture quickly enough for a shot, and contrast failures you are wasting approximately one box a day of ammo. That's $8 per day. If you only shoot once a week in summer that's $80 per year. Project that over the life of a scope, say 10 years, and it can be easily seen that you almost can't spend enough on a good scope. And of course many of us are much more addicted to the sport than that.
Based on my experience hunting with people that have inferior equipment, I really think the miss ratio is greater than 10%. And all the guys on this forum with cheap scopes that brag about the distance of their supposed shots are full of S*%&, because they tend to over estimate distances. These are the cheapskates that are far less likely to have laser range-finders to actually measure their shots.
BTW, I find it very difficult to do serious varmint hunting without a laser range-finder.
So spend what you think is appropriate, but I really think most of you underestimate the worth of a good scope.