An author does not hand over all rights. And they do not hand over all rights for now and in perpetuity, and I guess it depends on what you consider piddling for an advance. It would be wrong to consider an advance is all that an author would earn, especially if it is piddling, as once it is earned out then the author earns royalties. And non-compete clauses can be negotiated, modified or removed, and every clause in a contract is important so buried is of a skewed term to use.
If you think these kinds of contracts don't exist and aren't becoming much more common all the time then you are kidding yourself. And many authors are talking about them. Kristie Kathryn Rusch was one of the main authors bringing these issues out into the open on her blog. If you read through her Business Rusch blog posts you'll see her talking about her experiences and the experiences of authors she knows and communicates with in many posts. A couple are here and here. Also in her Deal Breakers series of posts and others. I've seen a lot of writers with experience in traditional publishing discussing their experiences of bad contracts in the comments at The Passive Voice many times as well. (If you read the blog regularly, writers share their experiences with various aspects of the industry quite often. The comments are an education by themselves.)
I don't think I've ever seen anyone say that if you go with traditional publishing you are absolutely guaranteed to have a terrible contract that will ruin your career. But it is undeniable that the Big 5 particularly have been moving towards more and more draconian boilerplate contracts and have also been extremely resistant to negotiating things like ebook royalty rates, non-compete clauses and rights grabs for new or midlist authors who aren't proven to be profitable. And having an agent doesn't help. Most agents don't feel comfortable negotiating anything other than the advance and aren't really qualified to negotiate IP contracts anyway. If you know authors who were able to negotiate for legitimately good contracts, those authors should be thanking their lucky stars, because that is becoming less and less common these days.