As someone who frequented and loved the Virtue Name Watch, this absolutely was not my experience either. I regularly grabbed names that I later released (and posted) when a concept didn't come together. In getting literally dozens of names from people over the years of the Watch, I never had one person solicit payment nor have I even heard of what you describe happening. People being people, I can well imagine that it did but I believe it was the exception, not the rule.
One of the things I and others used to do was post long lists (sometimes themed) of names that we found available. I cannot even begin to say how nice it was to hear from people in messages or in-game thanking me for a name I dug up that worked perfect for an idea they had.
It can get tough when I server has been around awhile and some folks just like single word names. I tend to be one of them. I still would find the occasional gem on Virtue even in 2012. It was fun finding cool names so late in the game.
