You're not wrong, but you're attributing the conclusions (e.g., grads aren't smarter) to the wrong reasons (willing to put up with bullshit).
PhD grads aren't smarter, they're playing a different game. There's bullshit everywhere, you just chose a different pile to call home -- probably because it smelled better to your reward/bullshit tradeoff.
Why would PhD's choose that pile of bullshit of yours? ...
As you say, "Academic research is rarely about the things it says its about" is a good observation. The reason is that most of the time grants are awarded to professors to try a method (their specialty) to a problem (the thing the grant is about). This looks like the professor is padding his career, but honestly, that's the point.
We would ideally have a huge set of professors with perfect specializations such that a combination of professors could solve any problem. Science funding is ensuring that deep, old expertise is preserved in case it is useful. Grants are a way to simultaneously test that usefulness for modern problems and expand it a little towards modern problems by producing new phd's with slightly mutated expertise. This is why PhDs endure their own type of bullshit, because they want to be part of this particular kind of knowledge legacy. There are other ways of doing this. A problem-first (vs solution-first) approach is kind of better for a different kind of venue, like business, NASA, etc.
Political spats? Absolutely. No contest there. Turf wars are a thing.