> But if analytics is helpful, (...) [opt-in telemetry] would be horrible too

I don't question that analytics can be helpful. I do question the degree to which it is, relative to other methods of gaining the same insights (such as better QA, user panels, surveying people, etc.).

I also don't think it would be horrible too. Inconvenient, yes. But horrible? People used to ship working software before opt-out analytics became a thing.

People shipped software before users had internet connections.

What I meant would be horrible experience - CLI apps halting and asking on every execution much like websites do with news letters, cookie banners, or paywalls.

How can users be incentivized to opt-in, particularly with a free-to-use application? I can see a case for ad-supported software, a developer could reduce or eliminate ads for that user in exchange for telemetry data...

Ask nicely. After all, you want them to do you a favor.

If you're less into respect and more into manipulation, offer them a meaningless trinket. A sticker on the app's home screen saying "I helped", or something.