Because...

a. It's really cheap for us to offer that service

b. Lots of those free customers end up upgrading, paying for extras, etc.

Between a and b offering the free service makes sense. We make money from the customers who pay us for our service (https://www.cloudflare.com/plans/), not from doing something nefarious with data. We'd be shooting ourselves in the foot if we did because that data is our customers data. We need to be very careful with that or we'd lose trust and not be in business.

Also, free means anybody can try the service and kick the tires. Often those people turn out to me the CIO, CSO, CISO, CTO, ... of big corp.

The plaintext thing is just too sensitive, and your free service offer makes the reach too wide. Could you be compelled, by warrant, to provide all plaintext traffic from a single user IP?