I found a good way to curb crunch is to pay extra for it: Every mandated hour that exceeds the regular work time gets paid 25% - 50% on top, preferably in time off (that is for 8 hours extra a week you get 10-12 hours off the next). This allows for crunch time when needed but provides a strong financial incentive to avoid it. A lot of things suddenly drop in priority from "absolutely crucial" to "can be done next week" when you respond with "I hear you, are you willing to pay a 50% premium for that?".
Also offering help with child-care makes things easier for employees with families. Those are solvable problems if crunch-time is limited to short stints and if both sides are willing to work together.
I fail to understand your post: it's neither a novel idea to compensate extra for overtime nor did I claim it was. I just said that I found this to work well.
I see unpaid overtime as one of the primary drivers of extreme crunch abuse. It aligns incentives in the worst possible way: More work gets done per week (though only marginally at best), project management gets to claim "we're doing all we can" and then, on top it's actually free time donated by the employees at no immediately obvious costs. Not surprising that this sounds attractive.
I've struggled for years trying to get my headspace into the right place to deal with salaried work. I've got a very blue-collar background, and my first few jobs were in those kind of hard-hat & steel-toe boot industries, where you literally punch in and out, and your compensation is directly tied to the number of hours worked. In those situations, the calculus you're describing about "does this need to be done now, or can it be done tomorrow?" already takes place, since unpaid overtime is illegal, and if you need more than 40 hours in a week from an employee, you have to pay the premium for it.
It's less of a salaried work issue, it's more one of people not knowing or not caring about their rights. I can't talk about the US landscape but in germany unlimited unpaid overtime is not legal, still you see that often in work contracts, especially in contracts in startups and web/multimedia agencies. Its especially common where unions and other organizations that could enforce legal limits are weak. I've for example never seen such a clause (and unpaid overtime) in organizations where a strong worker rights position existed.
No to overtime being paid in time off. Many times, they'll gladly let you do that, only to not let you ever use it, assuming they actually remember that they promised it to you.
Also offering help with child-care makes things easier for employees with families. Those are solvable problems if crunch-time is limited to short stints and if both sides are willing to work together.