Yes, I do find there to be an over-emphasis on self e-publishing, and media outlets unfortunately encourage this by featuring the latest, greatest success story who has sold thousands of copies or been picked up by a traditional publisher, often leaving out the amount of work it took to reach ‘overnight’ success. Recommended: Amanda Hocking’s post on her ‘overnight’ success.
That said, I think there’s a reason the vast majority of titles don’t even sell 500 copies (or 100): They’re of poor quality. Of those titles that are of reasonable quality, often the authors don’t have copywriting skills or basic online marketing skills (or even a passable website) to get it noticed.
If you have a quality story that resonates with readers, with the skills to market and promote your work over the long haul (with mad online marketing skills especially), you’ll tend to be more lucky. It also helps if you have more than 1 book to sell—if you have, in fact, a series to sell. That way, you can use the first book as a loss leader (free or 99 cents), then charge more for the later books. But that only works if you prove yourself with readers on the first book. If you read the reviews of many self-published titles, you’ll find that people gave up 10% of the way in because it’s so bad.
In short, though, I agree with you: If you’ve got one title to self-publish and you sell it for 99 cents, the ROI is terrible unless you have a massive following ready to buy once it goes live.
Publishing and web guru Jane Friedman did a Reddit AMA