First of all it's not 'free'. That $499 includes the price of Office, Microsoft just doesn't list it separately. Why else do you think it's $499? The Tegra 3 chipset is used in $200 tablets, the screen resolution is on par with $200 tablets, the net storage is on par with $250-350. There is absolutely nothing here in terms of hardware that makes Surface RT a $499 tablet. I heard somewhere that the actual cost of this is like $200 or something and Microsoft earns ~$200 over that for each Surface RT. So it's the software that increases the price to $499.
Now to your second point. A tech enthusiast like you or me probably wouldn't have any issues with the legacy desktop environment, but an average Joe is going to be confused as ****. Just imagine using an iPad and suddenly finding yourself being thrown into a Mac OS X interface. How jarring would that be? Totally unproductive.
Silly rabbit, tricks are for kids! People are trying or have tried to bring a desktop to ios... They have resorted to using onlive, teamviewer, logmein, etc to do it... Oh yeah, they also buy keyboards and docks to do what? Make the iPad like a pc/laptop. Alot of times wanting to use what? Windows apps.
Touchapps will almost always leave a lot to be desired without a real menu or header icons... I prefer office on the desktop on windows 8. Look at OneNote which can be compared because it has both versions available. The modern one leaves a lot to be desired than the desktop version. Look at the mail app, nothing like having a desktop version like outlook... Yet they both work... Super light stuff, the tablet app works... When you need to get dirty, the desktop is the best way to do it produce the finest results. IOS and Android apps installed or in the cloud web bases format will never hold a candle to it... Yet at least.
The surface is one of the best tablets on the market for people who have always wanted these features from ios or android. If they never did, then they will never see the value in the surface. I will gladly pay for my surface again... I paid over $700 for my iPad and still have to carry a netbook or laptop with me... I am going out of the house with only my surface now... If needed, yeah I will still take my xps13, but mostly I do not need to. This is a very productive machine... My CIO who is a mac guy, my CFO who is android and the rest of my it staff are extremely impressed with the surface. They are recommending windows 8 and or surface for mobile use in the field and fun. You can't beat it. It is not perfect, but sure did a whole lot right!