This is part of why some people don't get out more... the creepy people watchers.
Maybe someone in the near future will create an analog to the first person shooter, a first person labeler, that will keep some of these folks on the couch.
do you think that people are rude and insulting to others by default?
this is a common occurrence for people who act this way towards others. if you engage in the above behaviors, then you likely assume everyone else does too, and therefore are reasonably upset at the mean things and sneering you anticipate others engaging in. it's really important in these scenarios to recognize that your actions and others are most likely not the same, most people don't just shit on strangers for 'fun'.
Could you elaborate further as to why you do?
Your description of people watching sounds innocent, considerate even, but I think you're leaving out the display of open contempt that is so common these days.
It's relaxing, doesn't cost anything, can be done in many places.