I agree that there is much in the fish industry which is cruel - one of the reasons I don't keep otocinclus for instance, is that many of them are wild caught and suffer dreadfully during transport and sale - and I totally agree with you re: bettas in cups.On the cruelty issue, some view aquariums in general is cruel.The industrial breeding of fish may be consider to be cruel. Breeding fish to be food for other fish can be quite cruel, IMHO. In college I was a part time manager of a fish store, the customers loved when we feed the salt water trigger fish. These guys would just rip goldfish to shreds. I would never keep any fish which required live food.
I personally dislike the bettas in a cup you see at some many fish stores.
So where do we draw the line on the cruelty issue?
However I feel that if you take responsibility for the life of an animal/ bird/ fish - whatever, then it is up to you to provide them with the best conditions and the kindest treatment possible, and that means not deliberately putting them into a situation which could cause pain or distress. I know that many people cycle their tanks by using cheap,"expendable" fish, because it's quicker (and that includes some of the fish keepers on here. That, to me, is cruel - even if the fish don't die they often suffer dreadfully until the tank parameters are properly settled.
These are just my opinions - and like you I would never live feed anything bigger than a daphnia. It is a hard line to draw - there are many people who would argue that keeping any animal for any reason is a form of slavery nd is therefore unacceptable
I don't go that far, but I don't think we should deliberately put a sentient creature into a situation which may cause them harm or distress. (Not going to fall out over it though, I hope!)