I've bolded a couple of parts.
It's true many people don't know what to look for but on this forum (and others of course) people also don't listen very well to what they need. Many people, just wanting to ride some basic trails, are told they need bikes in the K's instead of the C's. Recommendations fall somewhere between the real budget and the real purpose. The "you need a better bike" doesn't really help that much.
The bike above is just an example of an alternative that gets a person in and riding for less than thousands. If given the choice I would probably like a modern bike as well but this will do most of the time. The issue for me isn't poverty, I have a 50K line of credit I could tap at any time, but I have a home and three kids and like to live withing my means and juggle several expensive hobbies, making progress upgrading in each of them along a schedule. The modern FS mtb is next on the list but I'll wait until the time is right and a deal appears.
Modern brakes are good, and there is something to be said for modern geometry, but I think FS and larger tire sizes only really come into play once you start getting air via jumps, drops or ledges or start really hammering uneven surfaces in a way that will break less forgiving bikes. Many new riders aren't looking to do that and that's the question/info that guides me in suggesting a cheaper alternative or saying they pretty well need a better modern bike.
In the meantime, I ride what I brought regularly and upgrade as I go (as you noted in your post). Some people might say that's pouring good money into a lost cause but most of my upgrades move from bike to bike. The suspension and second wheelset came from a $100 donor bike. Other than that; saddle, grips, pedals, bars, dropper, even crankset and cassette, can move to other projects.
Not everyone is into project bikes of course, but a cheaper entry bike can also serve as a back up once a better bike is purchased.
Cheers
