That would make perfect sense, investing all that time and money developing something like that and then giving it away free 
Yes I would normally agree with you - "free" doesn't make you any money, at least not in a traditional sense, but things are different today though.
Look at Google. They started off as a free service. I don't have to pay a cent to go to Google.com and search for something. Yet their stock is up to <GASP> OVER $500!!!
Look at Facebook. I maintain an account there (mostly for family) and I don't recall EVER giving them my CC# or writing them a check - yet their founder is worth MILLIONS as a result of facebook.
Using your logic, neither of those ventures should have been successful yet here they are! Granted they make a lot of their money through advertising, but they also make a lot through services that they DO charge for. They "lure" people in with their free services until their name is a household word, and when they require pay services that are available that's where they naturally turn.
My whole point of making it "free" is to get all of these kids into the game. The FPS ground war would be very limited (as compared to normal Aces High) and would only allow players to play in pre-set battles. They wouldn't be allowed to make their own setups or to choose who they play with. Perhaps if it took off those features could be added later on in a PAY version of the FPS game but I personally can't see it happening in the beginning.
Players in the "free" version will see tanks rolling around and planes dogfighting above them and think to themselves "HEY THAT WOULD BE COOL!" but then BAM $15 please! Since they've already seen the action and maybe even seen some of the communication they have a rough idea as to how to play the game and the strategies involved, so when they do make the transition from the FREE to the PAY version they are already (reasonably) in the know. This to me seems like a good way to get the basic training and the crack addiction processes out of the way at the same time.
In order for a PAY version of an Aces High FPS to compete with games like COD and the like, they would have to increase their graphics quality by LEAPS AND BOUNDS and compete with large companies that have TEAMS of programmers doing just this. Don't get me wrong I think HTC does a wonderful job, I just don't see them competing on this kind of a scale. A lot of people will be fine with lesser quality if it were free and the whole point of an FPS game would be to get people to join the Air wars, right!
Besides, if the FPS game did happen to take off they could always start charging for it later on. Maybe call it a free beta for two years like some other games we know.