Yes, you hit all the key points on the head. Their claim of "making a living" doesn't fly with me. Maybe I don't understand, but I think it is them who are missing the picture. Per your point number one, they would be making more of a living and increasing that living over time if they re-invested at least half of their earnings into HP. They don't have to of course, but their excuse does not make financial sense for more than the shortest term.
!INDEED