You're wrong that the GPL prohibits one from selling software as software. It doesn't. It does make it harder, because anyone can come in and buy one copy to distribute to everyone else, but this happens very often in the non-open-source world too. Maybe you've heard of pirates?

The only difference is legal ability to sue, but then again when your unwanted re-distributors/pirates are the masses whose real-world identities are hard to discover, this difference doesn't mean that much. You can also gain some (though not all) of the same legal rights to sue unwanted re-distributors by trademarking your application, which forces any re-distributors to have to redistribute under a different name (CentOS instead of RedHat) which puts them at a marketing disadvantage.

Is your example of developing a niche feature for a niche domain really the traditional way? I guess so, but since the GPL has been around there have been numerous examples of what-would-have-been-proprietary features still being developed, released, and open sourced. e.g. if you own all the copyright to a GPL program, some niche domain representative can come along and you can sell them a non-GPL license to develop their addon for which they can then resell. As another e.g., look at all the companies who have contributed to the Linux Kernel. The company wants a particular feature because they can use it to make money for some other reason, so they pay developers to write the code which then gets GPL'd. The company still makes money from the code, the developers make money by writing the code, and the users directly, obviously benefit from the code being there as opposed to the company having estimated indirect guesses at how much value they could capture by selling the code for what the market could bear.

Edit: I do agree with you about the irony, though.