This would be the interesting thing to know: if debt is being sold for pennies on the dollar, how can we pay off our own debts for the same price?

You can't buy individual debts. They come in large portfolios of thousands of accounts.

Ah, yeah I suppose people would buy their own debt if they could

I think there's not much point in purchasing your own debt as by that point the creditor has written it off anyway (and as someone said above - paying it off at that point will not do anything for your credit report, and the debt will fall off your history after 7 years either way).