I see MeumSimulacrum's point about free software and how it's an unfair advantage against commercial software... but truthfully, how many examples can you site OUTSIDE of IE vs. Netscape? I personally can't come up with one other.
My point is, while I think your point makes sense as stated, I also think that we're talking about an extremely small set of cases where the advantage can really be... well... taken advantage of!
I don't have a problem with free software insofar as if someone wants to give away the result of their hard work rather than try and make money off of it, fine. I see no problem with that. *I* will rarely if ever do it because I want to make money off my work except in some minor cases where I'm just feeling unusually generous, but I have no problem with people that don't feel the same way and want to give their stuff away.
What I <b>DO</b> have a big problem with is people that try and tell us that ALL software should ALWAYS be free and that I must release the source to anything I write. I find that position to be bonkers, to put it mildly, and I'm hearing variations on that theme more and more it seems.