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.