My hourly rate is $100, which is not the highest, but there are experienced writers for far less. In part because of the cumbersome billing process, my hourly projects are often less expensive. A few minutes here and a few minutes there adds up.
My main advantage as a writer is 20 years of recruiting experience, mostly for east coast US startups. Being a good resume writer (and maybe any good writer?) is really about knowing your audience. And when you've written a lot of resumes it becomes a bit easier. The voice is tricky for some people.
I can't speak for all freelancers, but I do think you're missing some things. I've completed 1000+ projects on Upwork with a 95%+ success rate over the past few years (mostly resume writing and executive bios).
As a freelancer, you can simply refuse the monitoring feature. I would never accept a project where the client wanted screen shots. I use Google Docs so my activity is tracked there pretty accurately as it is, but I think most freelancers aren't taking the monitored projects.
I'm not sure what you're asking about the 'client questions', but you are able to ask questions before accepting an offer or even making an offer. I have had clients make me an offer before any dialogue took place, but that's rather rare, and I always clarify my work process with clients before accepting offers.
Upwork is not my primary source of income - I have a private resume writing business that I run - but I use Upwork because it's brought me quite a bit of business without having to do any marketing (at the cost of 20% of my earnings). I'm happy to give them 20% based on the volume of business that comes my way there.
I primarily have used fixed price projects as well, but mainly because time tracking in Upwork is a bit cumbersome. You need to track in 10 minute increments, and my workflow often finds me in documents multiple times per day, but for short periods of time. That's not conducive to time tracking, so I try to set fixed price agreements.
I've been pleased with my experience on Upwork, but I know part of that is because I've had the benefit of being one of the higher ranked writers there for a few years and I have a larger stream of income from other sources, so I have the luxury of turning down quite a bit of work there if it doesn't meet my preferred criteria.
I'm a resume writer that also provides career consultation and job search strategy sessions, LinkedIn and cover letter writing, executive bios, etc. I work from home, am able to set my own schedule and spend time with my kids, and do quite well financially with very little overhead.
I've worked with a number of HN readers over the years.