The moral of the story is that hard-to-please idiot customers/employers don't want to pay more than realistic, normal-to-please customers/employers. So there is absolutely no reason why anyone would work for the first when the second is available. And believe me, the second is out there.

I've seen plenty of (experienced) businesses and individuals that refuse to work for toxic clients, because there is plenty of other work that pays exactly the same but without all the shit.

P.S.: According to your story, you sound like a good manager :).