I think I disagree with this, but maybe I'm misunderstanding you.
Pay as you go sounds strongly to me that you pay based on your actual usage, not that it's free except for add-ons. A pay as you go phone, for example, does not imply you need to buy a telephony add-on, an SMS add-on, etc.
PAYG phones, however, were always prepaid, so I think I would expect PAYG hosting to be similar. That said, if my site was publicly accessible without my prepayment, I think it would be clear that it works the way it apparently does.
It's potentially misleading, but I don't think it's intentionally dishonest.