JC: Absolutely. That's why you and I probably won't submit to that one... but I think there are plenty of folks that will, and most of them will not be doing it simply because they misunderstood the terms.
Everyone values their time/creative effort differently. I'm happy to submit my fiction to some markets that pay $0.01 per word, which comes to a fraction of minimum wage once you calculate all the time that went into writing, editing and submitting the story, but I routinely turn down consulting projects (in the gaming industry, so also a creative endeavor) that pay under $30/hour. Similarly there will be writers who are willing to give up full rights to their work in exchange for a higher pay rate, or good odds at a free-to-enter contest. They're not fools, they are just valuing their effort differently.
Well, you're entitled to that opinion, and I'm sure in some of the cases that's entirely true. However, I don't believe for a second that most people are willingly giving up those rights, and I don't believe that most writers actually have a clue as to what they're actually giving up. Even if the writer is aware of what they're doing, it doesn't mean they aren't being taken advantage of. I mean, the reason AW is such an invaluable resource for writers is precisely because there are so many writers out there who haven't the first clue as to the nature of the business, and might willingly give up too many rights for not enough money because they don't know any better. How many threads have you read in that section with posts from unfortunate writers saying "Oh, I had no idea what I was getting myself into?"
But I never once implied that anyone who wasn't aware of the rights grab was a fool. You don't have to be a fool to get screwed over.