How does it demean the recipient?
Exactly the way Chazal explain it does. Nahamusa D’Kisufa. We say in Bentching every day “V’lo Lidai Matnas Basar V’dam”, but go ahead with taking such Matanos on purpose (not saying right or wrong, but it is demeaning).
Finally, the culture of dependency (as I’ve mentioned before) can only hurt Torah Yidden as a society.
That’s even if it is not Tzedaka :), and I guess off-topic.
For the kollel families that I know personally, the issue isn’t whether to earn a living or not, but choosing to earn less (and do with less) than is potentially possible in order to prioritize learning; e.g., the spouse works, the husband teaches on the side, etc.
Could say the same about any Yeraim Jew and any sacrifice they make for their Yiddishkeit, from Kosher food to tuition to living in a Jewish community. Sacrifices are demanded by Hashem, otherwise we wouldn’t deserve the reward.
I have yet to personally see a kollel family living the high life
Depends how you define Kollel; see above.