like all humans they are still hyperbolic discounters who will value short-term pleasure over the long-term consequences to their future self.

Just a nitpick: As Carl Shulman observed, this is not irrational. It's just a different discounting function than yours.

Trying to make it come out as an amazing counterintuitive demonstration of rationality was your mistake.

Really? So you found a mistake in anything that I wrote? I must have missed it. All I see is you presenting just-so arguments along the lines of either "C causes people to play the lottery, therefor A cannot cause people to play the lottery", or "People are stupid; therefore they cannot be engaging in utility calculations when they play the lottery."