I definitely don’t love all of the detail of either option.
However, why would one chose an option that would cost them so much when the other, existing option costs nothing?
Yes that's the point. In my scenario I was wanting to distribute this on a different app store than Apple's, which forces me to choose the new terms.
Your question there is the exact question apple expects people to ask themselves, to dissuade them from supporting other stores.
I definitely don’t love all of the detail of either option.
However, why would one chose an option that would cost them so much when the other, existing option costs nothing?