While I've heard a lot of people say they didn't do something for money, I usually have a hard time believing it. They might enjoy their job, they might like pushing their skills to the max, and they might really be trying to put out a great product, but I just have a hard time believing they didn't do it for money. (Of course freeware games aren't being lumped into that category, although it wouldn't surprise me if a lot of their designers weren't hoping to get a foothold in the industry).
I can't really comment on beat 'em ups, mainly because I don't play them, but if I had to guess I'd say not enough people played them on the harder settings.
EDIT: I thought you were talking about games like Legendary Axe and Captain Commando. I haven't a clue why they lower the difficulty on fighting games.