"coins are still given but capped as a safety measure", nope, they are capped in order to make players spend more real money, because they give less coins and no dust for gyms, so if you need dust you have to buy more incubators or play more to catch more mon, no dust for gym battling
"if no one challenges the defender in gym, the pokemon loses motivation and gets kicked out", False, the pokemon loses motivation but don't gets kicked out unless someone battles the gym and defeats it. And even with that you and other players can feed the mon making the offense effort almost useless, try to fight a 2900cp Blissey twice, drop her motivation around 800, a person passes by, feeds her 2 miserable berries, and you have to fight her 2 more times again to go back to where you were, it is ridiculous...
"Whereas in the new system, things are designed to be challenging and circulating." Yes and no, gyms should always be challanging but should be rewarded both on offense and defense to keep players battling and prevent stagnation, this system does not either of those, does not reward offense at all because you can spend 40 mins to take down a gym, put a mon, and get kicked out inmediately after (first in first out) with 1 coin, so you have spend 40 mins and a ton of potions and revives for 1 or 2 coins and no dust, I am already seeing a drop in people fighting gyms after only one day and a half...So if no one fights your gyms, your mon don't come back, you don't get the coins either. Very bad implemented system in a way that a LOT of players will not get coins, no matter if you are in a gym, in 5 or in 10 or if you don't fight at all, if no one attacks the gym you get the same coins for playing 20hours/day than someone that does not play at all, again go back to my previous point, an attempt to make players spend more money.
As you stated you are in ones of the most populated areas of the world, so for you it may work, at least for now, give it some weeks/months when people starts noticing the diminishing returns and that they have no reason to stay on a gym for 40 mins to take it down and get one or two coins, then your mon will stay for days on the same gym giving you exactly zero coins and dust everyday. This system has to be changed or it won't survive.