I agree with you that it is an uneducated buyer who creates demand for pet store puppies, keeping them in business. If the pet store buyer knew 1) the actual source of the animals, 2) knew that they were financially supporting the puppy mill industry, 3) knew that their pet was much more likely to have health and/or temperament problems and 4) knew that they were paying up to double the price as they could buy a premium quality animal from a reputable breeder, then no one would buy from pet stores. Mission accomplished.
However, it is an extraordinarily daunting task to reach and educate the entire buying public one person at a time. The more realistic way to approach the problem is from the supply side. If the educated public can take actions to keep pet stores out of their communities - effectively cutting off supply, then there is no opportunity for John Q Puppybuyer to make the uninformed decision.
Shelter/rescue numbers coming from original purchase at breeder, kitchen breeder, pet store, etc sources vary from area to area. You may not see huge pet store originated rescues in N. Carolina where there is one Pet Land in your state. I expect in Florida where there are 21 Pet Lands, or in Ohio where there are 29 Pet Lands, the % of shelter/rescue dogs from original pet store purchases is much higher.
I agree with much of what you said. There are only two of your points where I would disagree. One is your idea that there is not a supply side surplus of shelter animals. The other is that there is a flaw in my logic.