I agree with most of what you’ve said — except with the conclusion that an ad-free future would be ideal.
Advertising is a way to put products and services in front of people and the internet has helped to build it into a 24 hour nuisance.
Publishers like The Deck Network are proof that advertising can co-exist peacefully with readers and the intended audience without spoiling or intruding into the experience of navigating the site.
Your comeback would be that the site is far more compelling when there are no ads at all. My only submission is that your audience of half a million people is an aggregation of interests who would not mind being pitched to as long as they can ignore advertising easily.
May be you can actually pay your writers a lot more — and make some decent profit as well.
Given the fact that I am in advertising, this comment is biased. But I know that the solution to a problem is not to work around it all the time :-)