People do things that might be legal, but are sketchy and do leave a bad taste in peoples mouths. Like In-laws buying a house and then renting to children and the government pays the rent to the parents via section 8. This might be legal, but its not something people would like.
Either it is legal or not. Plenty of things “leave a bad taste” (such as inversions, defaulting on loans, structured investment vehicles, and incorporating in Ireland), but companies do them all the time. There is no reason why individuals can’t take advantage.
DaasYochid – Fair enough, assuming the absolute issur of military service (which is very debatable, but that is their shittah and almost Yeharg V’al Yaavor). I will add though that after a certain age, I believe the government will no longer draft you (it may be 35, perhaps someone in Israel can help?). At that point, they should be able to get a job stocking shelves or in construction to earn something to feed their families.
AS for the Sichas Chulin, I believe you are underestimating the Yeshivish Olam in America.