You're mixing stuff up. More low-quality games are produced because game creation is now a) kind of a trend b) way simpler than it was years ago in terms of both promotion and tools available.
The easier it is to do something, the more bad stuff gets done. Saying that if people are going to get paid for stuff they do will make their works worse is nonsense. The simplest example are texture sets in Toribash - there are always crappy ones but also there are outstanding works (that are rarely free because there are only a few people who are fine with making good art and giving it out without charging anyone). Of course some will start making single sword mods to profit from selling them separately but I'm absolutely sure that there will be people who'll continue making good mods - and probably even better ones as they'll be able to get paid for them. See all the Skywind-like projects that were doomed from the beginning - perhaps now when their creators won't work on pure enthusiasm they'll see the light.