For 1, I can think of one compelling reason not to do that: It's harder to convince your funding agencies that your work is having real impact if you don't/can't convince the best venues in your field to publish your work. This is problematic because in your funding agency's eyes, it's impossible to distinguish between "I choose not to publish in the best journals" and "I'm just covering for my failures by claiming to only publish in arxiv."

A professor without any funding is a professor without a hope of getting tenure.