It's interesting that the controversy is completely centered around the iPhone. The behavior described for mute is exactly how Android's alarm app works as well. So it's not Apple going it alone in some quixotic quest to enforce their own twisted idea of how this should work on users in defiance of the rest of the industry.

I'm delighted with this behavior, because it perfectly meets one use case of mine: I want to set my phone to silent mode when I go to sleep and have it stop making notification sounds, but still beep to wake me up in the morning.