And yes, the fact you can't cash out directly shows that it is a scam, yet counterparties are willing to continue to do business with them. That again suggests that the mechanism isn't that simplistic.
And I don't doubt that Tether will collapse very quickly, but I don't think Tether is the det cord that sets off the collapse. Tether is the ricketty-ass foundation that causes the entire building to slide over and take out multiple downtown city blocks of collateral damage. The det cord is going to simply be a bubble followed by a panic collapse in the price. The blasting charges that then go off will be a bunch of major exchanges and counterparties to Tether going under. Then Tether implodes as a mechanism for the contagion to spread and wipe out pretty much everyone else.
Assuming a power distribution of coins across accounts, it's likely that 99% of tether accounts don't meet the 100,000 $USDT threshold to cash out. If you have a coin, where 99% of people/accounts aren't allowed to cash out that reeks of scam.
You can come up with tons of smoke to disguise it, and the whole "well you have to sell on another exchange, but prices there will be propped up due to 'arbitrage'" disguises and delays things nicely. But fundamentally it is propped up because people can't get out directly. There is no fair price discovery right now on Tether w.r.t. USD.