Of course if you are poor you are going to put food on the table and pay for basic needs before saving for college. These folks are who financial aid is geared towards and they will get it, because they do need it.
Now, as far as the remainder of what you say, I have to disagree. If you are saving for college, I think the 529 is a better vehicle than other taxable alternatives you give.
Money in the 529 is going to grow tax free - your brokerage or mutual fund is not. You may get state tax benefits by contributing to the 529, not with your alternatives. There are a few 529 plans that give incentives for using their plan. We put $100 into the CA plan just to get the $50 Amazon coupon earlier this year - will probably roll it over to our MA 529 by the end of this year. There are a number of credit card companies that provide additional contributions to your 529 which you will not get with your other savings alternatives.
Since 529 funds are counted no differently than any other asset of the parent, I think it makes little sense to go second guessing the mentality and thinking of a financial aid officer, deviating from set formulas because that's the way you'd view things and then save according to your own perception - in the end, that would probably cost you money you could have in additional savings (but then you accomplished increasing your need).