Why anyone would want to take that risk after seeing the RRODs of the 360, and how long it took to get basic features like in-game XMB on Sony's end, is beyond me. I'd rather not pay for the privilege of being the last beta tester.

Buying used creates demand for others to create demand?  I'm not buying it (pun intended).  If a person already owns an old PS3, but wants to upgrade, that decision has nothing to do with whether or not someone will buy the old hardware from them.  Those that are going to upgrade are going to upgrade regardless.  And the leftover old console simply gets passed along in the process, second-hand.

As far as prices going up in a non-sweatshop environment... companies like Apple will spin a bunch of bullshit saying that the prices will go up by "x" hundred dollars.  But the fact of the matter is that if the people at the top of the company made the decision to only make a million a year, as opposed to hundreds of millions a year, then there would be no price hike for consumers.  That sickening amount of excess wealth would get passed onto you and I, and more importantly the workers that put those electronics together.  It's all about greed.  A sweatshop-free world is completely possible, and the world would be a better place for it.

I fully agree with the second part of your post. How to get there I don't know.  

Not with the first however. For example I buy many games day 1 knowing I can sell them on for at least half of their value since there is a market for it, allowing me to buy more games at launch then I could afford otherwise. It works the same with consoles, buy a WiiU funded with the sale of a used console.
You buy something, you create demand, it doesn't matter whether it's new or used. Except when you buy from a thrift store or other places that sell donated or abandoned items. (You still create demand for such places, just not directly for the products sold there)

The best thing you can do to fight sweat shops is to buy the products they make. That is funneling money into those countries. Like the west before it, countries like China face increasing pressures to keep workers happy because so much money is riding on it. Eventually company workers will grow stronger and unionise, and worker rights will develope. It's the natural process. Not buying the product, or buying it used, does nothing for the process. You need to give China your money to help their people.

Its generally a bad idea to buy systems at launch as they tipically are rushed and end up breaking quite early. There are rare exceptions but they usually end up breaking aswell.

My launch SNES still plays. Faulty systems is more of a modern problem, and particular to Sony and especially Microsoft. And I'm not trying to pick on them, it's just QA stats that I read. I personally haven't had a problem with any game system I bought from Sony, MS or N, but I didn't buy most at launch. Only SNES, PSP and WiiU.

I've bought the first models of all Sony consoles and never had one break.  I dug my launch PS2 out of the addic and it was covered in dust and obviously neglected yet fired up like new.  Launch PSone worked till I traded it in 6 years after for a PS2.

I bought 4 consoles at launch (GC, Wii, 3DS and Wii U). Had some problems with 3DS after some time but it`s all fixed now.
When you buy something at launch you are always going to miss price drops, better hardware, promotions. But at least you don`t have to wait to play this or that game.

It's not financially smart, but if you don't mind paying the $$, then I see no problem with it.

I think because this gen has gone on for so long, who is really that keen to wait another 2 years? Im keen as to get my hands on some next gen action. I Have not had any problems with all my first release consoles (apart from a 360) I picked up and I have not heard of many Nintendo's with first release problems this gen?