How does that make sense AT ALL?

To a player, when they see a new server, they're more then likely going to expect that to be a server that has some form of playable content, not merely an open beta ._.

So basically what you're telling me/us is that hosted servers are just developer carrots on a stick?

Yes, that was their intention.

...

trying

Free gold for two weeks, let's see how this goes.

graal (pc) is a development program more than a game.
why should they give away the biggest feature of the program for free??

It's advertised as a game, therefore, why bring the development aspect into this?
The fact is that observer mode interferes with the immersion process of playing the game, it wouldn't even matter if it was primarily a development program, albeit an outdated program.

look at the main website
under 'Graal Playerworlds' (the section we're talking about) it says: "CREATE YOUR OWN GAME'.
i think Graal is marketed more for developers than players in recent years

Did you get a new kitty? :p

Point made, but let's revisit something said earlier, why give its biggest feature for free as you said, how about why is it that we have to pay for the right to develop and then have stefan/unixmad be allowed to take our work without proper commission or compensation? If we are as advertised to make our own world, why must it be so to stefan/unixmad's very strict designs? What If my world doesn't have an observer mode, but the fun of the game is the freedom of the game for everyone who plays and is given equal opportunity to buy what they wish without having to hold back, why is it that my world has to be controlled so heavily?

If you were able to have both creative freedom and an effective pricing scheme, less decent developers would be willing to contribute work to the golden goose servers, where many have stated a dislike for the lack of creative freedom.