1. There is certainly a large number of people who will pirate whether the game is $60 or $5. If you made pirating easier and consequence free, itd be a donation model. Gabe Newells statement speaks more to doing the best under bad circumstances, than openly espousing piracy (make games cheap enough that paying is worth the convenience of going through hoops to pirate it). If he was fully sincere in that statement he ought to allow all their steam store to be downloaded for free.
If you cut down the difficulty of cracking a game, and generally made it easier to pirate, wed just have a nice cracked Steam store anyone can download any play anything they want, do you really think thats going to help the market?
2. Characterizing the buying and selling of a goods, a non essential like a video games no less, as an "ultimatium" is ridiculous. By pirating youre just subsidizing the cost of the game onto people who paid for the game legitimately.
You developed the game, you have the right to charge whatever you want for it.
Perhaps there are arguments to be made since copies of digital goods are essentially free, but this isnt it
You can characterize it as you wish, but the optimal amount of piracy is not zero, it's whatever amount costs more to quash than you will gain in revenue from quashing it. For many endeavors, this is quite a large amount of piracy, perhaps even larger in numbers than legitimate acquisition. For other endeavors, the balance lies somewhere that feels more favorable to the creator. There are many ways to find roughly where this line is, and DRM can be part of an effective scheme, but it can also be (and usually is) a crutch that obfuscates the line instead.
Valve is not a charity and tolerating some piracy pragmatically is not equivalent to wanting a free-for-all. What's good for the consumer can still be good for the creator and Steam has proved that. It doesn't need to meet some purity test.
> There is certainly a large number of people who will pirate whether the game is $60 or $5
The intersection of people who will pirate a game at any price and people who will buy a game is an empty set.
I used to pirate everything, no matter the price, now I pirate nothing, no matter the price (except for Metro: Exodus, because it was pulled from Steam for anti-competitive bullshit).