I personally think the whole "rice paddies" argument is complete B.S. The fish that most of us get are born and raised to the point that we can buy them in a fish room somewhere. Some people import them from Thailand and other countries where I suppose it's slightly possible for the fish to come from them - and probably do... but I bet if you took a poll here, a huge majority of people have gotten theirs either directly from a breeder or off the shelf somewhere.
This whole issue could be debated for years, and there will never be any solid right or wrong answer. I agree with you in the sense of fish needing a certain amount of space. If you look at a species of fish like danios - if you have ever sat and watched them for any amount of time - they're psychotic little swimmers who don't sit still unless they're.... well..... pretty much unless they're dead. They swim back and forth, up and down, etc. That's their nature. And they're usually swimming in groups - they need room.
I'm not saying that bettas should be kept in teeny tiny containers - because the cups they're kept in make me CRAZY. I HATE them. But - I very strongly believe (and NO one will ever make me feel any different) that a 1 gallon tank is a suitable tank. It's not my first choice, and that's obvious given the fact that I now have everyone of my fish now in a 2.5G or bigger - and I have 16 little slimy friends. But, given the fact that I like to give lots of unfortunate little souls a place to live that's comfortable for them and that they will live a fantastic life with me, assuming they live through whatever nasty illness or problem prompted me to drag them home with me, I think that having a 1G tank for them is just fine. And just for kicks, I challenge anyone to tell me that I'm doing a disservice to a fish by bringing him/her home and nursing them back to health in clean, sparkly warm water where they get a soft plant to lay on, loads of attention, any medication they might need, and a variety of food that would challenge any family reunion potluck spread. EVEN if it is in a 1 gallon tank.
And that stupid gumball machine tank ALSO makes me crazy.
I tried writing emails to all of the ebay sellers trying to pawn stuff like that off on unsuspecting people, but that job got completely overwhelming - it could be more than a full time job for someone!