I do not know specifics of bundling agreements (shocker that I admit not knowing something:). I do know that libraries at some Institutions have started to provide funds to their researchers to pay the APCs. The library then goes to the Open Access publisher and negotiates bulk APC deals if they commit to a certain number of publications. Sort of a win win grant wise. This does not necessarily guaranty publication but if it does not get published you don't pay (processing submissions is an expense Open Access publishers incurs).

I am certain that that no system is perfect. My belief is that the Closed Access publishers have had free reign for so long that the largest ones abuse the system and competitive models are useful to restore some balance. The model also restricts access to information.

I would argue that one downside to Open Access is that incentives volume over quality (as others have said) but I would judge that on a per publisher basis just as I would any publisher. Closed Access models might also provide publication in areas of research that don't get tons of attention and research money.

I would also argue that there are other problems within research such as lack of reproducible results in many papers that is a far more pressing issue. Just my 2 cents. Thank you for the honest discussion.