The thing is though, as you said, it's my personal iPhone. If I want to be able to install an unsigned app I should be able to. There should be ways to dissuade the non-technical people but my feeling is it is my iPhone so I should be able to do as I wish.

Nothing against you personally, but since you get the same iPhone as the non-technical folks, some compromises have to be made, and they ain’t gonna be in your favour.

This is the myth that everyone is going to be screwed by. Nobody is going to be legally responsible for malware that ends up on your device.

The only difference is Apple has the $$ and incentives to remove it as soon as it's brought to their attention (assuming it's actual malware that may cause large financial loss not just copyright infringement).

Alt-stores will be ridden with malware and nobody is going to be legally responsible for it. We can just hope the alt-stores that end up existing have incentives to keep them "clean".

Correct, which is why allowing no-store app delivery would unleash an even greater chaos. In a world where any random website can trick a user into downloading an app via sideloading, there's no hope to protect people from 'unclean' software.