Maybe it was free until Level 3 said "hey Comcast, why don't we expand our peering by 500 Gbps so that it can handle Netflix" and Comcast replied "that's gonna cost you".

Hmm, while what you say may be technically true, it makes it appear as if Comcast would have incurred an expense which they wanted to recoup.

IIRC, Level 3 wanted to simply push more traffic through their existing peering ports. Would that have Comcast more? No, it wouldn't have, AFAIK.