It's a matter of trade-offs.
You look at 5k heads and go "good god, you'd have to be a moron to buy that!" -which on the face of it, isn't terribly unreasonable. Hell, I drug my feet on that too. I didn't adopt mesh -period- for a couple of years. But what you get for paying (what can be an outrageous amount of cashmoney) doesn't end with just the contents of the box the head came in.
Buying the body, and the head and all of that isn't just an isolated purchase, it's buying tools that are used for blogging, it's buying cachet in the fashionista circles and by buying not just mesh, but specific brands you demonstrated both knowlege of what people like and also a financial commitment.
There may be other things I'm missing because I'm not a fashionista -but the sexytime parts of SL I hang in these days work in a similar way (ie demonstrating a commitment to your "game"). The places I go it's common to see profiles that say things like "I spend time and money on my avatar, and I expect you to too" which is saying "I worked hard, you should too", IE "I expect you to match my level of commitment" -because no one wants to be left to do all the work.
So in both the high end fashionista places, and in the gutter I roll around in, spending that amount of money is an investment that is spent in hopes that it opens up other doors or other avenues ...if nothing else, it's an investment that helps us to look better in snapshots.
Pardon but are you implying that these people put more time/effort into their avatars because they pay more?
Putting more money into something doesn't mean you put more effort into it and neither does it mean you put more time into it, unless said money is split across more items, in that case you spent more time collecting the necessary parts.
I can see that there are people who do this for blogging purposes and i'd be fine with that if said bloggers didn't praise these items like Jesus's second coming but rather come to a similar conclusion than i do and warn other users about these items rather than recommending them without a second thought.
I don't know how much time and effort you put into your stuff, or anyone else does but time is a very fragile variable, since time depends on each user's skill, skilled people take less for the same work. Generally as someone who knows his way around the UI and Content Creation i can quickly do what i need to do when i need to do it and i don't just stop at clicking a button on a HUD to color my eyes (i still do these things manually for greater and more accurate control). I spent time ... *ahem* legally getting the textures, analyzing them, optimizing them where possible, reducing unnecessary clutter and fixing issues with the bought items (if any). I wrote and documented what i did to optimize my avatar in a blog post (which sadly i had to hide because it could be seen as guide on how to steal textures for nefarious doings ~ although i was clearly using it for good things), showed the stats of before/after, what i saved and that the end result looked the same, with less issues and was much better optimized in script usage, texture memory usage and polygon count and doing so involved more than just detaching a thing, it required removing/replacing scripts, extracting and editing textures, editing the object and could have even stepped up one notch with full mesh editing in blender (if i again wasn't so lazy) to fix even the last remaining issue.
That is, this is not even anything special or out of the ordinary, this kind of modding is the baseline of what Second Life avatar creation was the past 10 years since i'm in SL, it pains me to see that people have forgotten how to do these things and accepted a ridiculously higher pricetag for less freedom and dumbing down. Maybe this is just a furry thing, furries were always used to assembling their avatars from parts, doing technical modding... but even if that was the case why is it that human stuff doesn't offer these things as option at least that would be an excuse for a higher pricetag (a weak one but at least one at all). What pains me even more is when humans come along and try to find excuses for these high prices or outright talk down furry stuff ~ "its cartoony" "its not the same as human stuff" "but furry stuff doesn't follow realistic proportions" etc, i see these every day and they are weak to say the least. Furry content creators put a lot of effort and time and technical know-how into their creations to create these things whereas humans just hire all kinds of people to do their dirty work for them, half-ass their rigs, spam subdivide on their stuff because more polygons = better and then go around and complain that SL runs as bad as it does... or worse complain at the Viewer devs who spend their time on fixing or lessening what is caused by these creations. Attachments getting detached on TP, SIMs lagging like crazy when people TP in, your framerate being horribly low, textures going blurry all the time, just to mention a few are all issues bad content causes which could be prevented or at least drastically reduced.