The market is a little more dynamic than that, wholesale bidding into the ISOs is still the biggest option but many utilities run load shifting programs of various sizes as well.

Still, the conclusion is like you said. There's basically no real-world scenario where it makes sense for a residential customer to go it alone, because they can make at most a couple hundred bucks a year. So makes sense for their device companies or someone else to figure it out with utility and pay thousands of homeowners to agree to participate. Ohmconnect has a cool service in California.

Demand response programs are great because of their scale and ability to provide incentives and command and control without directly interacting with the markets.

The real big thing is aggregating the aggregations. Distributed Energy Management Systems (DERMS) / Virtual Power Plant Management Systems are an active research topic.

one could imagine a company that gives fridges out for FREE and sells the aggregated “balancing energy” to recoup the cost of the fridge.

I like the business model. But it'd surely be advertising at you too. The pressure for the owner to pick up those free dollars would be just too strong.