What development is being wasted? They can't sign any contract with a team if they want to keep their amateur status for college, and therefore they cannot join team functions like dev camp (yes there is the 48hour loophole, not getting into that technicality). There is no development by the NHL org happening, they just own the right to sign them eventually.
I don't disagree that the loophole should be closed, and I agree that a commensurate pick as compensation seems fair, but I had to pick the nit.