How on earth would we end up with nodes that large with a 4 megabyte block limit

Read what you wrote. "eventually they will run out of money" ... that is not serious What if eventually we run out of time while waiting for them to "eventually they will run out of money"? What if eventually Bitcoin network becomes unusable? What you wrote is not an argument. Filters are addition to economic incentives. Bitcoin is MONETARY network, not jpeg decentralized storage. Jpegs are spam. Run your Bitcoin Knots friends.

Knots has no bearing on how usable Bitcoin becomes over time... This is the part you seem to not be able to grasp...