If my memory serves, all of AT&T's plans have unlimited text. But you are correct about iMessage using data, it always has. You are approaching the entire SMS/MMS/iMessage thing incorrectly. iMessage, while a messaging service, works like email, it is a data driven service, unlike SMS, which uses a portion of the cellular signal to send messages. iOS devices use iMessage, as long as you have it activated, and non-iOS devices use SMS/MMS. Of course, MMS, which is sending a non-iOS device a photo, or a group message requires cellular data as well, whether you have an unlimited plan or not.
As I told you earlier, and Lawrence has reinforced, is that the Send as SMS switch is only for iMessages, and only when the party is not connected to data. We also told you that your failure to receive SMS has nothing to do with any of those settings on the phone. You need to contact AT&T about that, since SMS is a carrier feature, and they have control over it.