I am actually quite surprised you are still unsure what to do here.
Have you had any advice from anyone who genuinely thinks downgrading is a good idea with all the considerable downsides listed on this thread?

Have you listed pros and cons for both decisions?

Cad,
You can probably resolve this quite quickly.
Meet with your supervisor and ask them to be brutally blunt about how they see your progress. By definition you are not best placed to judge. You supervisor is. Let their answer guide your next move.

Oh and NEVER compare yourself to other students. It is pointless and it's the road to madness. Take it from someone who learned this the hard way. You probably won't be competing with them for jobs.

If you have completely lost interest in everything it might be time to walk away with an Mphil and try elsewhere.

I know life can be made very difficult for people but I can't agree that the response to that would be to accept you have no control at all over your situation. I have two daughters and if anyone made their lives difficult my instinct would drop everything and visit that person. However I believe it is my job to ensure my kids are educated about how unfair life is and to fight for personal control themselves regardless of the consequences. They need tto do it for themselves.

What I would be telling them is this:-
You can always get a new job. Always.
You can always get a new PhD position. Always.
Don't accept crap from people. Ever. It never ends well.

Learning to cope with difficulty in general and difficult people specifically is a core life skill.

I think it's fairly simple. If you don't learn these skills you will be shafted again and again. The earlier you learn to tackle these people and regain control over your future the better in my opinion. It doesn't help to soft soap people. Bad people aren't suddenly going to go away and people need to learn to protect themselves instead of relying on others to do it for them (police, courts etc). I think it is idealistic to think otherwise.

I don't think MyWorld has a choice. It's eat or be eaten. The next time her supervisor makes an innappropriate comment about her appearance she should not look at him, carry on her work in a nonchalent fashion and in a very assertive voice say "If my husband heard you saying that he would beat the shit out of you" and then ignore him. He would have to be a real dumb ass to then start punishing her. He may not be scared of her but he will be scared of what her husband might do!

Yes, it's a blurry area and because of that, the OP has an obligation to be absolutely certain that sexual harassment is taking place before making any sort of formal complaint. A person's career is on the line here.

Men hit on women all the time even if the women is married or working for them. Although I personally wouldn't do either it's a long way from there to sexual harassment and I think we devalue the problem if we fail to distinguish between them. The examples you gove above are clearly examples of sexual harassment but I am not sure this is what MyWorld is actually having to deal with.
There are many examples of supervisors and subordinates hooking up so in my opinion, this is not the issue. Harassment for me requires the harasser to be in no doubt that what they are doing is unwanted. I am not sure whether that is the case or not with MyWorld. It's clear she is not happy but does HE know that? A strong verbal response is a cast iron guaranteed way of getting the message across. Non verbal clues really aren't enough. I don't think the point about being "powerless" to speak up is good enough for grown adults to be relying on. An accusation of sexual harassment will destroy this man's life so if he is making you uncomfortable you either need to tell him or leave.

Actually another bit of advice might be to ask HR to have a word and tell him he is making her uncomfortable without directly accusing him of harassment. Now she would have a log of that chat and an email trail. It would then be tough for him to punish her. She could also ask for all meetings to be attended by a 3rd party to ensure no foul play. I have seen that tactic used twice to good effect.

TQ, when I say a conversation is needed about the purpose of a PhD, I was talking more generally from society's point of view rather than the student's perspective (which as you say will differ from person to person).

As a society, with limited funding available to hand out to people, what do we want a PhD to be for? Why bother with them at all? Should it be about creating an intellectual elite to solve the most pressing problems facing society? Or is it something else? It is obvious what we get from it as students. What should society expect in return for that investment?

You really must tell your husband. This is not something you should be keeping to yourself. If this was my wife, I would be pretty annoyed at not being told especially when the situation has ground you down to this extent. Sharing problems is what a marriage is all about.

Depending on how bad things are you could consider using your husband here.
For example, you could try talking to your supervisor about your husband on a regular basis and particularly when he talks about something you feel uncomfortable about. That is a tactic I have used a few times down the years to get a very clear message across before any misunderstandings can be allowed to gain any ground.

A technique a friend of mine once used was to tell the "target" man about a situation where someone had hit on her in the past and her husband had responded violently towards that person.

I am not sure about accusations of sexual harassment here. Harassment for me is not just about unwanted attention. It requires a clear message from the targetted person that they are not interested and then continued attention despite that message. Is that the case here?

Yeah I think my uni charged students a reduced fee for write up years as well. I seem to remember people talking about £200 or thereabouts but I might be wrong.

Also, I seem to remember reading somewhere that a PhD used to take only 2 years. Changed days.

Some other notable examples of people sacrificing status and steady income in the pursuit of activities meaningful to them personally would be:

The busker on the subway.
The sculptor who needs probably a decade to master what they do before they can hope to seek a commission.
Musicians who live as squatters or sofa surfers whilst trying to create a hit. The list for this includes Blondie, Bob Dylan, The Cult, Guns n Roses and a stream of others too numerous to mention.
Poets.
Actors.
Novellists.
Film and screen writers.
Playwrights.
Ironmongers.
Knitting and textiles enthusiasts.
Inventors.
Self Employed people.
Entrepeneurs.

If the only thing that matters to you is success then these areas are not going to be for you because they require years and years of undiluted effort with absolutely no guarantee of success or perhaps only fleeting success. It has to be about the journey because there may be no destinations at all.

TQ, if you find one of these types of people you will probably have found a kindred "the journey is everything" spirit. I think everyone else is likely to be problemmatic unless they genuinely accept you for who you are.