I chuckled a bit while reading this, because what you wrote is exactly where Blink came from. It was a fork of webkit, which in turn was derived from KHTML. Then again, the fact KHTML was discontinued does support your point to an extent too, I guess.
But the point is, Chrome is doing exactly this - providing the engine free as in beer and letting people embed it however they like. And yet, what you’re predicting, ie. not using the original but just using forks instead, doesn’t seem to be happening with Chrome - they still enjoy a massive fraction of the market share. There’s no reason to believe that this couldn’t happen at Mozilla as well. People usually want the original product, and it’s only a small fraction of people that are really interested in using the derivatives.
The difference is how you interact with the browser engine. Blink is very easy to embed into a new browser project. I’ve seen it done - if you’re familiar with the tools, you can build a whole new browser built around the Blink engine in a few hours. You can write pretty much whatever you want around it and it doesn’t really change how you interact with the engine, which also makes updates very simple to do.
With Firefox, it’s practically impossible to build a new browser around Gecko. The “forks” that you see are mostly just reskins that change a few settings here and there. They still follow upstream Firefox very closely and cannot diverge too much from it because it would be a huge maintenance burden.
Pale Moon and Waterfox are closer to forks of Firefox than Librewolf for example, but they’ve had to maintain the engine themselves and keep up with standards and from what I’ve read, they’re struggling pretty hard to do so. Not a problem that Blink-based browsers have to deal with because it’s pretty easy and straightforward to update and embed the engine without having to rewrite your whole browser.
Unfortunately, since Google controls the engine, this means that they can control the extensions that are allowed to plug into it. If you don’t have the hooks to properly support an extension (ie. ublock), then you can’t really implement it… unless you want to take on the burden of maintaining that forked engine again.
That said, Webkit is still open source and developed actively (to the best of my knowledge - I could be completely wrong here). Why don’t forks build around Webkit instead of Blink? Not really sure to be honest.