Offloading to the cloud and charging the user seems like a bigger breach of expectations than the hard drive space.

If you have a choice there's nothing wrong with it. It's the same way that iCloud Photos already work. You can either disable iCloud and have everything locally in your Photos app or let it dynamically offload to iCloud (If you have enough cloud space).

I'd rather pay for cloud space that I'm already using anyway than having it take up my limited space on my laptop that I can't extend.