Why did Niantic give huge XP bonuses for leveling up friends?
This seems a strange decision. It's not making Niantic more money (the default explanation for most things they do) if anything it's detrimental because it reduces the need for lucky eggs.
I hear of people having some fun by levelling up "empty" accounts by simply adding many friends. Seems strange that Niantic would allow people to reach level 40 without playing the game.
I hit level 40 today. I spun a stop to hit that magic number. A better climax than levelling up another ultra friend.

Answers
Wow you have never been even close to a rural area if you think Niantic caters to rurals. Last time I went outside of the city for a weekend I jogged 7km through forest to get to the nearest stop so I could keep my streak going. The next stop after that would've been 20km away. There were 0 spawns on my 7km route except for 2 around the stop.
There’s nothing that consume more premium items and stardust than maxing out mons. In my son’s account he’s still L29 and simply doesn’t feel the pressure to raid everyday because he can’t power up more his favorite ones. I raid like crazy for resources because powering up to L40 a number of mons with optimal moves takes an insane amount of dust, candy and TMs. And binge raiding costs money.
So there you go.