I never book 35 minute connections. But a lot of travelers don't understand what it means, and (historically at least) search engines surface faster flights earlier in results as "better" flights which is one of the reasons they do it (plus to create as many viable connections as possible).

When you say "Delta's willingness to rebook" - rebooking costs Delta virtually nothing, and the vast, vast majority of delayed flights are determined to be out of Delta's control and so they do not provide hotels or ground transportation (although there are some occasional gestures, especially for those with status) and so that is a cost to the consumer, not to Delta.

You're right that many flights arrive early, but the median flight is only a minute or two early so it doesn't change the math much. Keep in mind A0 is in the 60-65% range, so A "minus 5" is almost certainly less than 50%. The median flight pretty much arrives exactly on time (with the mean arriving past arrival time due to the long tail of delays).

Selling 35 minute MCT to consumers - especially those in Basic Economy where they are likely to be further back in the plane - with a standard policy to close the door earlier than they really need to is questionable to me.