A bunch of this is just...wrong.
"- Graduate students (in this setting) are typically funded, so the cost of their credits (often higher than undergrads) are determined by the university and such costs are a major factor of what is taken out of the grant the professor gets their portion (sometimes after the uni's cut!). The rest then goes to the student's salary and hopefully some left over for new lab equipment."
There are a number of ways to cover students - TAships, university level scholarships, and grant funding. For grant funding, the cost of the credits is something we can budget for, is in my university markedly lower than an undergraduates, and is budgeted for. This is portraying "We had to budget for someone working" in a weirdly salacious light.
"- Grant money must all be used and cannot be put aside for future investments. It is better to buy shitty lab equipment because you don't have enough for good equipment and can't invest any excess (even if by being spartan elsewhere). If you don't use the money in the allotted timeframe you're considered to have improperly managed the funding."
It's not better to buy shitty lab equipment - while grants don't like funding large capital purchases that will cross projects (except for the grants for this), the equipment doesn't vaporize. The cluster nodes and servers I bought for my first project are still running, and indeed go in applications for new grants as equipments I have, in a section often titled "Facilities and Equipment".
As for not spending it out in time, there's what's called a "No Cost Extension", which is "Hey, we didn't spend the money in time, can we have a bit more time?". The NSF grants the first one of these automatically, and one grant I'm on is on it's third (a program office has been very understanding about the difficulties of conducting research in hospitals during a pandemic).
I've never had pushback from a program for getting an NCE unless it was genuinely something where we messed up spending somehow.
"- A funded graduate student is considered 49% employee and 51% student."
Nope, they're 100% students. This is both good and bad for them, but it's true. They're just expected to spend half - or less - of their time in classes, and the rest on research.
"- Graduate students in year 3+ (median 5 years for PhD) are not taking courses and doing full time research and likely being a TA at the same time. (Tuition costs do not change)"
Every university I have been at has had a mechanism for a massive cut in tuition once a graduate student has passed their preliminary exams and become a candidate. It's a big enough one that literally my first instruction to my students is "File your ADB waiver please."
"- A successful graduate student sees their advisor less and less as they dive into their niche area of research where the advisor no longer has any level of expertise. (This is what's supposed to happen)"
When my students are "on approach" they see me and their committee more and more. They're just expected to drive those meetings more as well.
"- When a graduate student stops taking classes they still pay for credits and at the same rate (albeit through funding, which they are often writing for at this point. But prof gets the award)."
Again, this is simply incorrect.
"- Universities pay students and professors to publish papers and judge success by publication in venues"
Perhaps in the most abstract sense, in that scholarship is a metric by which I was judged for tenure and promotion, and without that, I don't have a job and thus am not paid. But there has never been a "paper bounty" or something like that for any position I've been in.
Venues do matter, and some places are cutthroat about it, but other places aren't. In my department for example, publications that are in respectable journals appropriate for your discipline will carry you all the way to full professor.
"- Students and professors "judge" works submitted to venues by other students and professors for no pay (i.e. on university time)"
I consider this part of my service obligation, and indeed when filling out annual reports and the like, list reviewerships and editorial positions.
The rest of your stuff on publication is actually refreshingly correct.
"- Promotions are given to those who's name is on the most works, regardless of position or contribution to that work."
I sit on my college's tenure and promotion committee. This just actively isn't true. We look at the difference between solo and co-authored papers, where a particular individual is on a paper and the balance between first, last and middle authorships (I'm in a field that doesn't alphabetize). We also consider whether someone is expected to be there, or is anticipated to contribute a lot to work that others will end up being the lead for (as a modeler, this is occasionally the position I'm in).
Then there's positions that give considerably more weight to teaching or service.