This is proprietary commercial software with a 100% discount for hobbyist customers. It's very common in other industries, such as with fonts (this is almost identical to the model Blambot uses for some of their comic-book fonts). And there's nothing wrong with that.
Just don't be surprised when the community doesn't respond well when you take an open-license project, accept unpaid contributions from others, and later convert it to a non-open license to pay nobody other than yourself.
Normally, I couldn't care less what someone does with any software I release, so I'd normally prefer to just release code under an MIT or Apache license, but I've reached the point where I honestly no longer want to help the free software movement grow, so I'd like to release my future personal projects under a subtly non-free license. Faircode looks like a very nice option. I remember Tuomo Valkonen, the creator of Ion, moving to a license that would ban LTS distributions from distributing outdated versions of his software (basically, every time he released a new version, all distributions carrying it have 28 days to remove the old version from their archives and replace it with the new one, no matter how stable the distribution is intended to be).
Honestly, the older I get, the more my views on free software are converging with Valkonen's. Half of the reason for the license change was because he was tired of LTS distros carrying old development versions filled with bugs that have already been fixed in newer versions (he was getting flooded with bug reports for things that had already been fixed), but the other half was that he was aggravated by free-software zealots and wanted to make sure he wasn't doing anything that could be seen as contributing to their movement, and he swore that all future software he releases would be closed-source.
I do agree that I wouldn't want to call it "open source", though.
Wrong. "Non-copyleft licenses" are, well, anything that is not a copyleft license. It doesn't have to say "do whatever you want." A standard commercial license is one kind of license that is obviously _not_ a copyleft license.
I'm not really following what point you are trying to make.
Selling software is selling software. Do you consider any kind of selling software to be 'extorting money' (I think that could be a reasonable position honestly, I'm not going to dismiss it out of hand), or something special about the 'faircode' license that gives the software free to some entities but sells it to others that makes it 'extortion'?
Only if you distribute the software.
So sure, it changes the definition of "distribute" as it is used in the GPL - but my understanding of the "why" is to to be explicit about what is really needed to guarantee users the four freedoms (run, study&fix, copy, share fixes).
Copyleft licenses force people to release their modifications as source code, or pay the copyright owner for an exception (if the owner is open to providing the exception)
Non-Copyleft licenses say "do whatever you want, just give us credit."
"Faircode" says "Even if you release your source code, if you make enough money, you still have to pay us."