I don't understand what you mean by macros "destroying" functions. They are completely different concepts. They behave differently and they are used for very different purposes: they are orthogonal.
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It is possible to design a Lisp that doesn't have a function/macro distinction. Such a Lisp would just use vau for everything. An example is the language Kernel:
So, to answer your original question: no, it is not necessary to have both mac and def, but that's how most Lisps (including Arc) do it. I think the primary reason is historical, since I think the speed argument is actually bogus for most programs.
Well, I'm not sure I'd say that... what vau does is remove the need for mac, but def is still there, to make it more convenient to define functions.
That does mean that functions can be implemented in user-land, which is very nice, but it doesn't really change functions very much.
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Also, I prefer to not think of vau as being "the ultimate macro", I prefer to see it as a construct which is very different from macros, but happens to serve the same purpose in most cases, which is why vau can replace macros in most (but not all!) cases.
Then again, I also prefer to see functions as being separate from vaus, even if they're implemented using vau... So take what I say with a grain of salt.
It took me a while to realize that I shouldn't think of vau as a macro-like thing. Macros and functions are different kinds of evaluation policies; vau just lets you construct arbitrary evaluation policies. It's like discovering the quarks that all fundamental particles are made up of; quarks don't preferentially constitute an electron more than a neutron.
The challenge now is to build a runtime where vau can have performance comparable to existing lisp systems.
