Since there are risks involved with being a free liquidity provider, and no benefits (as far as I can see), I'm trying to understand what incentive I have to do anything other than dial this knob all the way down?
Well you can adjust the knob in a way where you can charge people for rippling through you. For example, you exchange 1 A.BTC for 0.98 B.BTCs.
I agree with you, the default when creating a trust line should be to set the quality to zero. Would you like to open a Github issue? You can do it here:
https://github.com/rippleFoundation/ripple-client/issues?state=open