Yes, high-quality free products tend to try to find ways to fund themselves that involve appeals to their users. It's beyond ludicrous to find this a "sad state of affairs".
>If only there was some sort of "free high quality product" operating system that existed and proved this asinine defense of capitalism wrong
The only reason Linux is popular on servers is because it has huge corporate sponsorship. Big players figured it it's more beneficial for their bottom line to commoditize the backend infrastructure and invest in OSS. Same is happening with developer tools.
It's not happening with anything consumer facing because everyone wants to take their angle at capitalising on the market. I can't think of quality user facing OSS that isn't aimed at developers or isn't trying to capitalise on the users somehow. Scratch that - blender is the only one I can think of - these guys are an amazing exception.
I won't argue these projects aren't quality because they certainly do the job, but they obviously lack polish of commercial software. Eg. despite looking into kepass I still chose to pay for 1password, just for the convenience.