The problem with that logic is that the iPod is mass market. They've sold 10s of millions of the thing. They're not selling to the 'snobby elite'. The snobby elite of the music world are not generally iPod fans, quite actually. (Not that they're Zune fans either...) When I was an iRiver T10 owner and on some of the iRiver forums, I really saw some people there who were truly into their music.
I don't think its out of character for Apple to offer a pocket friendly service either. Apple products are expensive. Somewhat. Its hard to argue the iPod line, any of them, are currently overpriced. The iPhone voice & data plans are pretty reasonable too. Apple isn't in business to rip its customers off...its in business to make as much money as they can and if they felt a music subscription could make them money, you better believe they're going to offer it.
As far as you not wanting to deal with subscription restrictions (its not even true DRM since you don't own it)...I don't see how its really an issue any more. Can every computer in my house play the music? Check. Can my 360? Check. Can my Zune? Check. Where's the last hold out? My car (where I enjoy listening to the local radio anyway...but that's me. I like my FM tuner

) However, my stereo system will be getting an upgrade in the near future to include a line in. And with that there is no place in my life that I couldn't listen to my subscription music...I imagine its the same for most people. I can't even dream of what else you would want to do with it.