Why not have your local tests, automated or not, cover the common cases and error conditions to catch programmer stupidities? Then let the actual humans do the strange corner cases.
If your design is even close to correct, testing repeatedly tested code is pointless. If your design is corrupt and your implementation is sloppy, no amount of testing is going to save your ass.
I do very rapid turns and I am a one man team. I can turn my system in less that 30 minutes and have the user testing it in a live situation on the other coast. If I want 10 turns a day, I can easily do it. Low coupling, high cohesion, clean correct design, and disciplined implementation makes it possible.
I agree that doing things in small chunks is a great way to do it but doing the equivalent of a weeks worth of global automated testing for each small change seems like a silly exercise. That is except for the server hardware salesmen and system admin people.
The sales commissions and payroll look rather good. The production of real value is questionable. Bang for the buck is as important for testing as it is in any other part of product development.