No....they are not stupid, as you yourself said I was spot on with why grinding gold at the Arena, in its CURRENT state, is not an exploit.
It would be an exploit if you were receiving experience at the same rate as actual, putting your gear and livelihood at risk, battle. Those battalso leave you weakened and force time to move forward before you can recover.
That’s the risk vs reward. There is NO risk in the Arena, therefore there should be less reward on all fronts. That’s how you make a balanced, rewarding experience.
At full experience, the effort vs outcome would also be off kilter. You are fully healed every single time. You don’t have to stop and heal and pay more upkeep. You don’t have to hunt down another group to fight that is an acceptable difficulty. If you lose, nothing happens to you. There is very little (no) effort to enter into an arena match.
So if you choose to put a horde of effort into the Arena to stockpile the marginal gains from each individual match, it’s not really a huge deal time didn’t move forward. But if I’m able to effortlessly come out the gate as a level 10 character because I spent my first two hours at the arena, that IS an exploit, and the game’s metrics for advancement are poor