Prizes? We Don't Need No Stinking Prizes!

Kwame, man, do we ever live in different worlds. I am an American poet but in the poetry world I inhabit, first books never win prizes; in fact, the sorts of books myself and my peers write are never even considered for prizes -- even some twenty or forty books into a career. This whole awards system you describe -- with its sense of entitlement and striving for an upward trajectory -- is completely foreign to our notion of what a poetry career is.

This is not to say that such books are not worthy of prizes nor is it to claim that authors such as Charles Bernstein, Lyn Hejinian, Juliana Spahr, Craig Dworkin or Jackson Mac Low don't have their fair share of respect, but I could never imagine any of these authors whining about the fallout from scenarios you describe such as: "Receiving rejection after rejection can be debilitating, especially if your friends and acquaintances are picking up awards and seeing publication." One continues with their work, accepting the fact that awards and prizes will most likely allude them for the better part of their careers. We refer to it as an occupational hazard. Mac Low finally got an award -- The Wallace Stevens Award from the Academy of American Poets -- when he was 77 years old, some twenty-five books into his career. Bernstein, with over twenty books under his belt, has yet to win an award for his poetry. For younger poets, of course, awards are not even part of the "excitement at the fulfillment of a dream, and [there are] all the accolades and affirmation that one will get." It simply ain't part of this picture.
If there's a certain holier-than-thou purity to my sentiments, it's true. We are untainted by the careerism and economics of the publishing world you describe. In my American poetry world, an "A-List publisher" is never an option; best case scenario is a university press, which you rightly describe as part of the AWP or MLA cult revival of the dead. And "appearance[s] in Poets & Writers, reviews in the NY Times, Time Outs all over the place, and shortlistings for major national prizes" is a joke; rarely do my friends appear in places like this. Our best hope for a review is in Rain Taxi or on Silliman's Blog.
Bitter? Yeah. It's never made sense to me. When I look at other worlds, I see a different story. In the art world, for example, the "avant-garde" is the mainstream. Big awards go to the most experimental artists: in 2004, Rirkrit Tiravanija won the $50,000 Hugo Boss Award for a dematerialized, relational practice which displays no traditional art-making skills. Tiravanija can't render a face; instead, he cooks curry. No one bats an eye.
It's shocking to me that, 100 years after the inception of modernism, two separate streams still exist in the poetry world, with almost no interaction between them. While the mainstream gets the awards and cash, the outside gets the cred. Cool, huh?