IMO “free software” is misunderstood in exactly the same way “open source” is misunderstood, at least in the way you mean. Both terms are not good at getting the important point across in the title, because the words people want associated with the title aren’t actually in the title. This will forever be a problem as long as the title requires explanation (which it unquestionably does) and as long as software is a growing field and new people keep joining. I don’t know why the idea to say what you mean would get push back, we can’t expect people to interpret the phrase “open source” to mean more than what those two words imply. We can, and should, IMO, come up with a phrase that has words that imply the important bits. Following the CC model, maybe something like “derivation allowed” and “no discrimination”.
Both terms are fine, long used and well-established. Free Software and Open Source software have complicated enough meanings that they need a sentence, not a phrase to explain; the phrase is just a label. And any software practitioner who doesn't know what people mean by Free or Open Source software isn't very good.
If I start calling my OS "Windows" people might get upset even though windows predate MS by millennia.
