I imagine that the occasional free flight on non-blackout dates doesn't make up the cost difference of always choosing the cheapest flight but I have no data to back it up.
While some of these can be purchased as one-offs, the cost of doing so would probably offset the "cheapest flight" approach, and the convenience of receiving them automatically has some value on its own.
The cost/benefit might still not be there, but it's not as straightforward as the ticket savings vs. free flight savings question you put forward. You have to also bear in mind that many miles hunters are logging some (or most) of their travel on an employer's dime.
I've had endless hassles converting miles to flights. It always seems that there are no seats available for mileage redemption for the routes and times I want to fly.
So I've concluded miles are worth a lot less than cash. I now buy the cheapest ticket regardless of carrier and use a cash back credit card. No more miles, no more loyalty.
If your time has value, and if you're spending your own money (not your employer's), is it worth the effort to juggle all the programs, deals, miles and terms?
Or is cash the better option?
I also churn credit cards for the miles and hotel points. Next month I'm flying to Tokyo, Taipei and Hong Kong on Cathay Pacific and Japan Airlines in first class and Eva Air in business, staying at the Park Hyatt Tokyo and Conrad Hong Kong.
Then in January I'm flying to Vietnam, again in first class on Cathay and JAL, with free stops in Hong Kong, Beijing and Tokyo.
Also, there's another huge benefit to sticking with a single airline - you learn that airline. When I used to fly 2 weekends/month, it was very disconcerting when I had to use a non-United airline and deal with the subtly to vastly different quirks.