I think you should learn a bit into Chinese language and characters to understand how indispensable the characters really is. Consider English example of "bat", "bet", "bad", "bed", which are voiced very similarly. If spoken by non-native speakers with heavy accent, these words may be confused with "pat", "pet", or "pad". (Even in English, some accent-heavy people pronounce "pen" and "pin" identically!) A Chinese analog would disambiguate with "baseball bat" instead of just "bat" and so on. The problem is that such situation is much worse in Chinese than in English and it occurs even in daily use. This is why that most words are represented by two characters. Note that the pairing does not introduce new characters and thereby not adding to the "grinding". It's just adding new complexity to the language. Reading newspapers would require only about 4,000 characters (out of about 100K total) with about 300 tone-syllable combinations, giving about 13 of each left for disambiguation. Knowing about 2K is enough for daily conversation. Mind you these are still common use, including in formal signs or speeches. This is NOT uncommon as you've claimed.
Also, in Chinese, using more refined characters would show your erudition, politeness, or even social status. Politeness can mean everything for Chinese. So, you see, language isn't restricted for informational purposes only. It can also convey mood, politeness, formality, etc.
Note that new words are formed by juxtaposing two or more characters in an unusual way. With each character giving its individual meaning, the people could guess the meaning of the new word. If the people are deprived of the character and, say, have to read the pinyin, the meaning wouldn't be as obvious. Example: Xi3 yi1 = laundry becomes xi3 yi1 ji1 = washing machine. If the people don't know the characters, the meaning of xiyiji isn't immediately obvious. This fact makes Chinese language very intuitive and even facilitates learning. Children in China cope with this complexity pretty well. Their literacy rate is 97% in 2010.
The barrier of entry is as much as East Asian people learning English. Chinese and English are two completely different languages. For East Asian people, such barrier isn't as much, akin to the barrier of entry for learning French for English-speaking people.
Therefore, Chinese characters are indispensable.