Who cares how bad the free trial experience is if the paying customer experience is good?

Technically, here the paying customer experience was the problem, not the free trial one, because they were automatically upgraded.

Generally, you don't want to award people/companies that don't respect you. I'm not saying that you shouldn't re-evaluate them in the future, but they will walk away with the wrong lesson if you just start throwing money at them.

The problem here was with the free trial.

If you view it through a paying customer lens instead, then all you see is a paying customer who chose not to pay their invoice and might get sued. There's nothing strange about that.

All of the problem here was with the transition from free trial to paying customer.

Personally I do care if I get hacked or if my clients get hacked. If you don't care, you don't care, I guess. For you it's enough that the "paying customer experience" (???) is good, whatever that is. Okay buddy.