For what it's worth, my professional background is entirely in game development and systems programming. I'm not a professional academic. All the professional work I've done with mathematics is applied.

I think you're overstating some things, but I mostly agree. My main disagreement is with your implicit premise that the best practical theory should exist at the same level of abstraction as practical applications. The real numbers have been a really successful practical theory. Physicists and applied mathematicians know they don't "really" exist, but more "realistic" alternatives are awkward and messy. The same applies to more extravagant theoretical constructions like Hilbert spaces. They're an extremely nice mathematical setting for applications (e.g. optimal control, approximation theory, finite element methods, quantum mechanics). No-one should be losing much sleep over their ubiquity in applications. If your point is that we shouldn't belabor some of their technical details when teaching them to practitioners, sure, but that's already the case.