I think the problem is that the proverbial small inventor is extremely rare, and if they are indeed small enough for us to take pity on them, then a patent isn't enough to protect them anyway.

I don't think the proverbial small inventor is so rare, but that as you say, a patent is practically useless for them.

Make the prior art fee scale up by number of patent applications submitted by that entity, then. First one's free. Then $100, then start growing at some small-ish exponent.

Then you get shell companies and such being used for patent filing making it harder to establish who really is in control of the applications.