Xbox Game Pass Core subscribers will get access to a small selection of the games available with the regular/higher tiers of Game Pass, starting with more than 25 games, including:
Among Us
Descenders
Dishonored 2
Doom Eternal
Fable Anniversary
Fallout 4
Fallout 76
Forza Horizon 4
Gears 5
Grounded
Halo 5: Guardians
Halo Wars 2
Hellblade: Senua's Sacrifice
Human Fall Flat
Inside
Ori and the Will of the Wisps
Psychonauts 2
State of Decay 2
The Elder Scrolls Online: Tamriel Unlimited
Games you've already acquired from Games with Gold will still be available as long as you've got Xbox Game Pass Core.
On your first point, this is a standard upsell which will easily get people up to the second tier. After that they can start increasing the prices and bridging the gap in cost once they have onboarded as many people as possible.
A $1 up sell? Really? That just seems like a waste, they should drop core to $6.99 and pop the next level to $11.99 or so, that dollar just looks stupid.