The fee rate he paid was roughly around the median for that block, he only ended up paying a large total fee because the transaction size was massive.

The upfront added fee is a possibility -- we can't know for sure unless the user or Terra Pool tells us the truth. It's possible that Terra Pool connected directly to whichever node relayed the frog transaction.

The funny thing is, the video is basically a 2-second clip repeated 30 times. He could have paid 1.6 million sats and gotten the frog on-chain instead of a 60-second video. It's obvious the guy is too rich to care about an extra 10k usd.

The main problem is that the frog video is now part of the UTXO set. Had this been done using OP_RETURN, it wouldn't create a spendable output, and full nodes wouldn't need to keep track of it in the UTXO set (a very expensive process). But since it's encoded as a standard output, it remains in the UTXO set until it's spent, unnecessarily bloating the set.