There are some problems you ignored. First is that the industry claims there is a "shortage" to justify high quantities of H1B's. There is no evidence of a general shortage, only spot shortages, which are necessary for those with glut skills to be accepted into new-trend skills.
Second, is that during IT recessions they don't shut off the H1B spigot: visa workers keep coming. IT has been booming and busting since at least the 80's and I see no reason this pattern will change.
And I have seen H1B workers being abused. Your example is only a spot sample.
In general, the industry wants "instant employees" rather than spend time and money on training. This means that if a US techie loses their job in a glut area, they cannot get retraining for the new area because the company will hire an H1B worker that already has experience. The citizen can read books etc., but companies prefer existing paid experience.
Companies just want what they want when they want it and don't want to pay anything inconvenient for these goals.
Regardless of whether there are some H1B abuse myths floating around, the whole premise is based on a lie.