I think that you're absolutely right here.
Reddit seems to be operating under a notion that incentivizing content creation will result in more of the current content that is the main ongoing draw of the site - when instead, the kind of people who make content because content makes them money are not the same people as the ones generating shit for free on Reddit.
Worse, the people doing it for money are incredibly likely to "optimize" their returns in ways that are not great for the content itself or the settings it's taken place in. Low-effort, low-draw, content that is easy to monetize rapidly crowds out things like long-form or complex content, and content creators are not respectful of the spaces they're trying to leverage for money.
The near figurehead example was the explosion of "blogspam" that hit Reddit about a decade back - when affiliate and SEO-ridden blogs were getting spammed as submissions and mass posted to comments sections in huge volume. The content creators didn't care that it was unwelcome, they just wanted an audience that would turn into money.
Past precedent suggests Reddit isn't going to do a good job of this, and doing a bad job of it risks driving off what remains of existing 'native' users in the hopes of capturing the sort of low-engagement users who are already satisfied with TikTok or Instagram.
When ye olde Eternal September hit, many new users did not realize B1FF was satire, and thus chose to emulate the coolest dude on the internet.