I worked at WebAgency (not this one, another one) for 13 years, as a developer, designer, and in leadership roles. In my current role I'm on the other side of the table, dealing with contractors we outsource some of our product work to.
Your experience felt really familiar to me, symptomatic of badly managed projects I've been on both sides of. To be honest, it felt familiar in a way that evoked some emotional feelings I have from working on those kinds of projects for so long! Very few people want to rip off a small business owner, or to have a client feel like they've been swindled. Glad I'm out of that game.
What I'd like to add is that this can seem predatory, like Isaac was taking advantage of you, trying to wring you dry. That may be true (I don't know), but the same thing can easily happen when everybody has the best of intentions.
It is up to a PM to pump the breaks if they see designers or developers burning billable hours on things that won't help the project succeed. The Project Manager turnover you witnessed, and the CEO backfilling for them, happens surprisingly often. There's a lot of churn with PMs at these agencies, at the ones I worked for it felt like we could never keep them around. Since the harried CEO usually makes a horrible replacement for a full-time manager, it's not surprising he dropped the ball in this case.
In theory, it's also up to the designers and developers to manage their own time, but those folks are also often under pressure to be billing ~40 hours a week. If there is nothing for them to do but sit around, and your project is still active, I could see them filling their days working on unbidden ideas "to help you out". Again, I have no idea what happened in your case, but I have seen that before.
At the place I spent most of my time, our version of Isaac would have probably have refunded you a lot of that money, if indeed they really were busy with big clients (my guess is that's probably a line he gave you). It's a feast or famine business, and in feast times we refunded hours generously, both because we lived off referrals, and because we genuinely did not try to bleed our customers dry. It just worked out that way sometimes...
I will say that I think your takeaways from this experience are right on. I would also add that you shouldn't have to be the de facto project manager, but in practice that is the safest way to make sure you get what you want.
Meaning: schedule check-in meetings, find out what people are going to deliver and when, post up in their Slack, etc.
Good companies will appreciate your involvement, as long as you're not acting like a maniac, and when I think back to the most successful projects I worked on as a contractor, they all had some highly active contact on the client side.