Maybe a little history of how irregularities are handled in Europe can better explain to American readers of this board why Europeans seem to have quite different views of what is "right" and what is "wrong".
Long before there was EU or even EU regulations, there were many really independent airlines in Europe. Some good, some so-so and some poor.
Some of the better and richer airlines, did offer quite a lot of care for their passengers in case of irregularities. Even in clear cases of force majeur, such as snow or fog related delays or cancellations, the "good guys" would always take care of all passengers and pay for meals and if necessary overnight accomodation. No questions asked.
Other airlines did not do it and they did not have to either. It was just a way to differentiate between carriers. The "good guys" could sell their tickets a little more expensively but offered a superior product, which included better service in case of irregularities and they probably invested a little more to prevent irregularities, too. (Like for example modernizing the fleet to be able to land in foggy conditions.)
As competition grew, profits all of a sudden became losses and even the good guys started to think twice before paying as some smart people had obviousely noticed that there wasn't a law that forced them to pay. Next weeks profits became more important that next year's. and who can measure "goodwill" anyway...
If Airlines did not have to pay in case of force majeure, they could also try not to pay in cases where they could pretend it wasn't their fault, or even in cases where it clearly was their fault.
And that's of course where customers felt not so happy anymore. They were used to the fact that at least the good airlines would always pay for care and all of a sudden faced big hotel bills themselves.
Lawyers were probably happy because there were cases were customers were so upset that they took airlines to court.
An ideal ground for the EU regulators to step in and protect their voters. Who would not be angry to be left stranded without any rights? And who would not like to be seen as Robin Hood?
As the EU tends to discuss long before deciding anything, I'm 100% sure there was a discussion if "force majeure" cases were to be included or not. Given the long history of probably over 30 years during which this was done, it is easy for me to follow the reasoning behind the EU regulation, as it just re-instated what was good business practice, but nothing beyond that.
Yes, I believe this is going to cost Swiss and all other European carrirers a lot, and some governments are going to help.
Without a law, it sounds about equally logic to me that
1. I will pay my hotel bill on my own because I happened to get stuck somewhere, even though this was no fault of my own
2. I will pay a share of the hotel bills of all stranded passengers with my next tickets if the airline is left with the cost
3. I will pay a share of the hotel bills of all stranded passengers with my next tax invoice.
With the EU regulation in place, it's option 2 or 3 only, but I really have no issue with this, as it could be me or more or less anyone else who got stuck.
The only issue I have is with Swiss, who clearly knows the EU regulation exists and that Swiss is bound to adhere by it, and now tries to wiggle out of it.
This is cheap.