Hi lucky - I've been in the same industry for 4-5 years and have been offering hosting (as a reseller) for 1 year. We broke 100 hosting clients recently and are hoping to own our own infrastructure one day. We recently put an admin in house who is able to handle all support and day to day server admin of the servers we lease. The way I see it, all of our clients need hosting and I'd rather be the ones charging for it then someone else. I think one of the reasons we've had so much success with hosting is that our clientele are mainly very small biz clients, many of them on static HTML sites, Wordpress themes, or Magento carts which require very little ongoing maintenance.

I definitely am not trying to argue any of your points, but rather chime in with some of my experience.