First, the fees are 125 at UA and DL and 150 at AA. I don't think $25 is that much of a difference and $125-$150 is the market rate.

Then, from what I can see at the airport, the dogs that I see at the gates at airports (no soft carrier/kennel) are large enough to not fit in a carrier/soft kennel under the seat.
I do see not infrequently owners with very small dogs in a soft bag, so one could assume the owner is paying for the $125-150 fee..

So I don't think the fees are rapacious or that the high fees are encouraging people to pretend their dogs are service animals.
The people that go at great lengths to certify their dogs as service animals are doing it not because the carry-on pet fee is high but because it is the only way they have to bring the pet on board.