I think their point is that at some block size, it's no longer feasible for most people to run their own node to verify the blockchain, and you start relying on a client-server model instead of a peer to peer model.
Are they planning to address this in any of the updates on their timeline? This turned me off from ETH completely, just feels like a house-always-wins situation skimming money from users.
Minor note, the reason for charging for failed transactions is to prevent abuse of network resources, don't want someone submitting millions of bogus transactions to DOS the network.
Thanks for the tip about flashbots, never heard of it