It's reasonable for a free service to offer premium features
Very true.
Enshittification means ... changing the existing service to make it worse, to encourage people to pay for subscriptions.
Also very true.
YouTube cut the default bitrate when they added this "feature". It was incredibly obvious to my eyes the instant it was pushed out, and remains obvious everytime I come across one of these videos. If they had just charged for better bitrate, I wouldn't have cared. However, they also cut the default bitrate down, making all the videos that have this look really bad.
This is textbook inshittification, complete with the gaslighting bullshit of saying "we were always like this! Its your fault it seems worse than it was!" in every design decision involved in the process.