it made me laugh when you made that selling out reference because its so very true. i'm a young reporter/journalist myself, out of college only three years. the thing is, and im sure you know this as well, you won't make squat as a newspaper beat writer. you have to move to a more specialized region, whether it be as a sports writer, stock market reporter, industry whatever. you have to make yourself a commodity in some field in order to make some bucks in this biz. you have to be able to do something that the avg person wouldn't be able to do. there are always people looking to become a writer/reporter/editor because they think its a cool gig that they'd be good at, which is probably true, they can be good at it.. the fly by nighters as i call them.... they'll always be a flood of writers out there and most people can cover the local beats fairly well, which will push down salaries for obvious reasons at the small-town paper.
but find a niche for yourself. for ex., when i departed college a couple of years ago, the market was tough. the thing was, i knew i needed two things - money, and an edge to get that money. so i studied some financing and got a job at some financial industry rags. they pay well (comparably, roughly double to newspapers and that increases as you gain experience) and if you play your cards right, you can be leading a pretty damn good life as a writer. also helps if you're around a major city, but you catch my drift.
but, back to the original point, back when I was an intern at a financial publisher, i got an email of some guy's obituary.....I thought this was terrible, how some guy who was working here just died...turns out, all he did was hang up his reporters hat and became a PR guy........they sent out a whole RIP letter because of it. its very frowned upon in the biz. you're right.
sorry for the tangent! good luck!