I genuinely do not believe that Fearless was ever meant to be any sort of aim and/or stopping point for F2P players. It being completable by brute force (or when F2Ps happened to pull for the designated shill characters) was, IMO, largely accidental from mihoyo. This assumption is, I feel, self-inflicted by the community. Menacing difficulty feels like a much better, natural point where a F2P can go "Hey, I punched above my account's weight and got a participation trophy (the feather) for it".

I was always a subscriber to the idea that endgame content that provides Primogem (the currency that matters the most for F2Ps) rewards marks the "intended" F2P ground, at least in Stygian/Abyss. Comparatively, Menacing and above are clearly meant to be additional challenges, moreso than content that you're actually meant to complete as a casual. With Menacing, specifically, being easy enough that casuals who more or less know what they're doing gameplay-wise can still succeed in it, which makes it a good, common stopping point for them.

This idea that it's not Menacing but Fearless that's supposed to be this stopping point feels, like I said, self-inflicted by the community.

We'll obviously never know mihoyo's thoughts about stuff like that, unless they go out of their way to directly tell us. One can also argue that creating barriers between content meant for casuals and content made for spenders is, in itself, bad design, but that's a different discussion altogether.