You’re correct I should have better worded my point: Signal used to be a single app that someone could install that could handle sending out their regular unencrypted SMS messages and Signal encrypted messages.
Signal also did exactly what you’ve described - auto-enabled encryption when it detected another signal user by phone number.
The net result was more people using encrypted messaging.
I think the point of this discussion is to showcase the hypocrisy by example.
So, you’ve hit the nail on the head.