Re: reality check
Possibly the weakest counter-argument ever put forward in your last paragraph if you're referring to the average guy on the street who wants to start a small business and needs an appropriate domain name.
You're paying rates for physical space which will have footfall outside it and a small time owner wont expect to have a property in a high rate area.
Domains are entirely different. If I want to buy a four letter domain that makes no sense, such as IWTR.com, which has no traffic, should I be expected to pay a few thousand dollars for it? These are simply automated scripts buying up the entire alphabet one letter at a time. Go through it, I stopped at IWTV which says it'll ignore any offers under $10,000.