I don't pretend to know the publishing processes exactly but what is so bad about it? I'm genuinely curious.
From the outside looking it it just seems like MS want to test and measure the quality of releases and not fill the marketplace with garbage any kid at home makes. Similar to the CC's of Halo rather than just having publish in every gamers Forge mode. If it's really slow or too much red tape then I fully understand but it just seems like quality control.
There can still be quality control with Self-publishing.
My best example I can use is DoubleFine. Psychonauts while being an amazing game did not do well at release at all and it was published by Majesco who was the one who made the money off of the new copies sold rather than the Developer which is usually the case with published games also the IP rights were kept from DoubleFine after the first game as part of the publishing deal, then with a stroke of luck DoubleFine was FINALLY able to get the rights to their IP back then made an update for the game and now make every cent off of Psychonauts sales which has been doing very well in the past few years.
Now can you see why they and some developers are put off of publishers? They do not make all the money off of their game that they worked on and sometimes the publishing deal requires them to forefit their IP. Also it allows for more creative freedom from the developers as well.
So if you were a developer would you rather find a publisher and have to make a bunch of deals and possibly altercations to your game or would you rather have full creative freedom and earn money for every new purchase your game gets?
EDIT: Sometimes publishers can be great and not to a bunch of dickish things, but striking a deal like that is usually rare.