You're assuming that the illegal swappers are willing to pay anything. They're behavior shows your assumption to be wrong. If they didn't want to pay RIAA prices they could buy used, or they could wait for the price to come down, or they could buy on cassette, or they could switch to discount stores that rarely charge RIAA prefered prices. But they're not willing to do those things, instead they steal it, because they want something for nothing.
Absolutely... most of the people blasting the sharers have never even used the services such as KaZaa, iMesh, Grokster, etc. For instance, from using it, I can inform you a few things that a pay-for-use service could help"
1) Bad copies of songs (skips, premature cutoffs, long dead times before song begins)
2) Songs not titled correctly, or containing incorrect info (album title, length, quality)
3) File names that do not match actual content.
4) Looking for songs, waiting for them to appear online.
5) Looking for songs ripped at a high quality.
6) Songs not normalized consistently (differing audio levels)
These are the chances one takes to get a freebie. If you promised a user they could get a song for say $0.25 ripped at 128 bits, at a consistent volume, and guaranteed to be the genuine item, then these networks would begin to fade away.