Again, good questions. My thoughts/answers in blue below.
Am I really being punished for stuff that either has fallen off my credit report (greater than 7 years)...?
No. If something has fallen off your report, it cannot affect your score. The score is generated purely based on what is in your report. (This is also why your increasing income hasn't helped your score, since a person's income is not part of his credit report.)
.... or from stuff that falls into the 5+ years but less than 7 years bucket?
Yes. For sure. Negative items (lates, collections, chargeoffs, liens, judgments, public records, etc.) can hurt your score a lot, assuming they appear on your report.
I consistenly make $2K payments per month.... Seems like a credit scoring system should naturally reward people that show a consistent payment pattern...
Throughout almost all of FICO's history the three credit bureaus have not collected payment history. They have recorded whether a creditor claims you are 30 days or more late on a payment, but not the amount you paid, or the dates. You could be paying your cards in full every month for the last five years and FICO would not be able to distinguish that from a person who never paid in full and was often up to 29 days late.
A few years ago with the advent of something called "trended data" it looked like this might change. Future credit scoring models, using these new data, would be able to do exactly what you expect -- see how much you are paying, when you paid it, and compare that with how much your CC bills were each month. It would have enabled scoring models to improve their accuracy while enabling customers to not worry about their credit.
Unfortunately the many credit card issuers out there have not gotten on the TD bandwagon (in terms of what they report to the three bureaus) and until they do, the big FICO models can't use those better approaches, since FICO can only use the data it gets in your report.
Final thoughts:
If your concerns are chiefly practical, you are in luck. Any number of people here can lay out some very actionable strategies on how you can improve your scores, whether FICO 8, FICO 9, or the much older mortgage scores. They'll need to know a lot more about exactly what is on your reports, but once they do know, improving your scores should be pretty easy.
