2) I don't believe that open hardware projects are (or even should be) economically viable. The same holds true for open source software. Yes, there are companies that make great money using or supporting OSS project but the open source paradigm is ideologically driven and not by market (except those shitty companies abusing OSS for pure marketing reasons with NO value to the community). When Linus Torvalds created Linux there was initially no market value in it. At the very beginning it was practically unusable in any commercial setting. Yet, people collaborated around the globe to create what Linux is today.
I disagree. Even your description is in contradiction with your initial sentence there.
Open source is economically viable because of, and through, market competition. Let that idea sink in a bit, and I'll elaborate.
If your commercial plan is to mass-produce a widget, and sell it for less price but more value for customers than your competitors can, open sourcing it makes absolutely no sense. However, that is not the only way to do business. It is just one of the ways of doing business that is not compatible with open source. And, as we have seen from the Chinese manufacturing abilities, it is not even a long-term viable way of doing business: someone will eventually find a way to mass-produce an even better version of the widget for smaller price.
The "ideology" in Open Source
is market competition: various ideas and implementations are tried and tested, and the "best" ones are incorporated into the common pool everyone can use without draining it. The currency is not about the end widget price, but about the usability and worth of the common pool.
(To go back to the town well analogy, keeping the water pure and flowing is good for everyone. If you think the only way to make market sense of such a well is to sit on it and charge money for access to that water, you are an idiot, and will find out the town will eventually just simply move somewhere else, making your investment worth nothing in the long term. Instead, you can for example bottle that water, and sell it outside the town. Or, you can provide water quality monitoring services for the town. It is very hard to think of new business models when you've only sold widgets or charged rent, but that does not mean doing so is the only, or even the best, business strategy.
If some of your fellow townspeople are happy to piss in the well, you have a problem. If someone installs a pump and pumps away all the water, you have a problem. If someone spreads rumours that this well is poisoned, you have a problem. If nobody cares about the water table level, you have a problem. This means, you need careful management of the well to keep it viable in the long term. Unlike wells, FOSS and OSHW projects are easily forked; they key difference is that the underlying resource cannot be depleted, and reproduction costs are essentially zero.)
A proof of this is the Apache HTTP Server. Its license allows proprietary closed-source derivatives. There used to be those around,
but they could not compete with the open source version, or even keep up with the development of the open source version and its features. License cost (for the proprietary closed-source versions) is not an issue, because those who really need a good web server and advanced features, often make a LOT of money from the service; and license costs are neglible compared to the related hardware and network traffic costs when implementing such a service. In fact, as far as I can tell, Microsoft IIS and LiteSpeed Web Server are the only proprietary web servers still actively developed (Apache and nginx covering over 80% of the market). IIS is strictly tied to other Microsoft products, and LiteSpeed seems to be preferred by QUIC users; they are both effectively niche products.
If your theory of FOSS/OSHW not being economically viable was correct, Apache and nginx -- or Arduino! -- would not exist.