We can’t always assume the end user knows what that will do. Some of my family members certainly wouldn’t. Having a lower default quality (even though it results in transcoding) that allows user to watch without buffering is a better experience than it just buffering or not playing if they select too high a quality 
We’d love to improve how this works, but we don’t have anything to share at the moment. None of those ideas mentioned are without flaws, and I like the speed test idea myself (speaking for me, not Plex here), but that’s not something super quick to do.
