As another old-timer, I have seen the effect of a large amount of land being released at once on the grid. Don't tell me you forgot about the snow sim land crash?
Ermm actually I don't LOL... I was probably still wandering about eventing, chatting and assessing what made this game any different from the prolification of similar games on offer (I won't admit in public to actually playing There.com at the same time).
I agree with what you say in broad terms, and your assessment of anyone's starting point and potential growth path. I believe people tend to look at the here and now, assessing what people have, at the time of their fist first arrival into the game, not being aware of the time span and risks taken to get to that point. The 'gold rush' syndrome being created by the various media giving the impression that this is unlike real life and it is a 'get rich quick flash in the pan' exploding like a firework. Land is only one way to promote oneself, and not even important, to certain commerce growth, it's probably the only tangible thing that many see as a way of showing how successful they are?
I still believe the biggest investment path is in people, it's not 'you are nothing without land', its 'you are nothing without good people'.