I assume the capacity would be such that at least the expected number of people would be able to use the internet normally as if it were no different to something they were paying for. This isn't homeless-only free wifi, this is everyone-in-range free wifi.

How is this any different from any other deployment of wireless service to a given population? It's just the taxpayers pay the bill.

Or are you suggesting that some users are going to deploy multiple clients to hoard the bandwidth? That seems like a solvable problem.