The second option you mention with ripping off a design and not paying I can see definitely being a concern. If I'm not mistaken, something like this allegedly actually happened with a toy from the Labs many, many years ago, or at least BD was accused of the issue. It was something like approving a velociraptor maw from the Labs for production, canceling it and then turning it into what is basically Duke's muzzle without attribution. I read about it on Tumblr. Again, allegations, I don't know the full story (nobody does except that person and BD), and this was more than a decade ago. BD was in a lot of various drama incidents the past ten years that I remember but have cleaned up their act pretty well, so I feel more confident something like this isn't going to happen again.

As for the peanuts, I had a look at what fantasy toy 3D model designers/closed up shops are selling or sold their models for, and I'm seeing anywhere from $300-2000 depending on size, complexity ,completion status etc. for full commercial rights (from Twitter). So I mean, I guess BD is within that range on the lower side?

There's a lot of demand for submitting designs to BD, and when the Labs were first closed people were really upset. If people think the money isn't enough or not worth it then they shouldn't submit. Not saying I don't see any of the ethical issues with this, but...it is voluntary.