Thanks for this "insider" view and very comprehensive analysis.

it's a very bad idea to pay scientists directly for research output, having seen the quality of papers coming out from some institutions which give 'per paper' monetary rewards

This is true. I'm speaking from my own experience. In Serbia, publication in some shitty journal was worth 3 points. Some solid journal like PlosOne, Analytical Chemistry was 8 points and... Nature, Science ware valued with...? Also 8 points.
So the tactics for many research groups was to publish the unrefined BS. As much as possible.