Your observations strike a serious chord with me, because the first class I took where a professor wielded set theory like a ruler to the back of students' hands was exactly the point I realized that mathematics was not my calling.

But I've come to understand that I was not realizing that I didn't like mathematics or thought it was too hard, but instead that if I made that my life's work, I'd be working with many more people like that, rather than the people I wanted to - bright and creative, yet kind and humble.

I don't think set theory or any other set of tools is the problem behind potential academics getting turned off. It's the people, and the culture of glorified monkhood.