Availability of a OTA tuner didn't stop many from using cable boxes or their TV's tuners instead.You could probably count on two hands the number of US broadcast TV stations that were available on C-band. That's why the receivers featured an NTSC tuner.
In 1998 there was no "obligation" for satellite providers to carry broadcast stations. In 1999, SHVIA laid down the rules for DBS carrying local-into-local channels. The requirement of "must carry" didn't arrive until later in the DBS world and AFAIK, was never applied to C-band.
Picture quality of broadcast channels wasn't appreciably different between the NTSC tuner on the satellite receiver or using a cable TV box. 4DTV wasn't part of local channel reception so your raising of the issue of 4DTV is a red herring in that context.
Quite a few bought into C-band to get access to content that they couldn't get from their cable service. The primary attraction was often access to sports programming (especially pay-per-views) and the kinds of programming that you would otherwise have to visit a tavern or casino to see. The motivation for them wasn't necessarily to replace cable but to supplement it. That supplementation status remains today though the subscription programming options have effectively gone away.