Children use to be sent out to work at the tender age of five also. Things change but they change slowly.
As for their reputation for fighting? People hear or see what they want to see. They see "fighting" and think the fish is a killer. It's because they were used for entertainment by man and they do in fact, fight each other. But killers? No. In fact, breeders are a bit concerned with the fighting ability being bred out of them,. A laid back betta usually will not bred, as the spawning behavior can be aggressive. But in the wild, they can escape one another, while in a tank, they can't.
As for the small spaces? They unfortunatley have the ability to live in small places. I say live, not thrive.
What I do is everytime I see something I know is worng, I get on the computer and complain. And complain! I've written wal-mart, and petco and others about how bettas are kept. We need to start in on the manufacturers now. They are the ones putting this sterotype out there with a tank sold in a box with a smiling goldfish or betta on it and the tank is under 5 gallons!