On the flip side, what if you're terrible at negotiating? For those people, even s theoretically reduced salary may be higher than what they'd get for themselves.
I don't have anything against recruiters but one should be realistic as to how things actually work.
I'll always advise candidates on the risk of asking too much or the potential for an offer to be retracted if we don't negotiate in good faith and reasonability, but it isn't accurate to think that the incentive to raise a candidate's salary isn't there for many recruiters. For your example of 10K that may result in $2,500 to the recruiter, that isn't an insignificant amount. That's a mortgage payment for some.
I do agree that the risk of someone being too expensive is real, but the recruiter doesn't decide on what is too expensive - that is a decision made by the market and participants in the market.