Looks like Milan didn't consider your points before going for Modric. A club should go for a younger player who will play for long in the club. When a young player is growing, he improves in skills and quality but for old players, they become weaker and lose their pace as they grow older. Gone are the days when old players were the best due to experience. Currently, the younger players gat it all.
Modric is only contracted for one season with an option to extend if he delivers satisfactory results this year and he was also acquired for free so why not take advantage of it? even though in terms of age he should have retired but his abilities can still be needed, besides Milan has young midfielders, the possibility of why Modric was brought in is so he can share experience with other young players at AC Milan, of course Milan must have considered this besides not all midfielders have to play relying on speed, the most important thing is accurate passes and Modric can still provide them at his current age.