It works because the populace is tired, broke, and minimal time and effort to deal with it.

I don’t know many people that would purposefully drag themselves through the court system out of principle. Maybe those with enough free time on their hands and money to delegate/consult with lawyers.

You are probably right though. If a majority of people rejected the cease and desist orders and actually called their bluff about vague legal action. Then these legal tactics would become useless, and the recovery in whatever damages to their "trademark" would be far less than the cost to hire even junior legal teams at big firms.

Maybe you should test your principles. Recreate this persons website idea, wait for Waffle House corporate lackey to send C&D, then you show us how it’s done. Instead of doing your armchair "should have, would have, could have" analysis.