I see some merit in your argument. However, there is a very strong trend in this industry to equivocate around titles and responsibilities. When "Senior Software Engineer" comprises everything from people with 2-5 years of experience to people with 15-20, it indicates something is fundamentally wrong with the way companies view the work they need done.

The fact is you're basically right: most companies don't want experienced people who will do a very good job and expect appropriate compensation for that work. They want people who can do the job just good enough to pass off products that are marginally adequate enough to bring in a target margin. If said people are also more inclined to be easily "persuadable" or awed/intimidated into putting more effort in for less compensation, even better. Such a condition naturally leads to the implicit age discrimination we see in our industry.

Also, if companies were more open about the salary and compensation packages they will offer with a position, it might more effectively deter the unwanted "seniors" from even expressing interest.