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I think there are two main forces contributing to this:
Signalling being "hard to fake" is not just about the physical/financial difficulty of sending the signal, but also the knowledge of how to send it, or that the signal even exists in the first place. You have to know who the fashionable celebrities are and pay attention to them, and avoid paying attention to the wrong celebrities (doing so signals you have good judgement, or more likely know the right people who inform you about who is cool and who isn't). You have to keep up to date with new information and new products as the fashions shift, and not be stuck with yesterdays fashion (doing so signals you still know the right people and aren't getting your information second hand as fashion slowly propagates). And most importantly, you have to actually care enough to spend your time and money for pure signalling, indicating that you are committed and loyal to this signal and not just sending it out frivolously. Anyone with a few hundred bucks can buy an iphone, but only someone who actually cares about being cool will willingly sacrifice the superior quality/price ratio of android devices for an overpriced apple product just to look cool. It's a costly signal not just in money but in time, knowledge, and dignity. (The last two sentences are exaggerated for comedic effect, but hopefully you get the point)
Signals are more diverse than a one dimensional quality slider that you want to maximize. A lot of signals are about belonging to a particular group. You might wear lots of dark clothing and makeup to signal that you're a goth, or conspicuously listen to Taylor Swift music to signal you're a fan and belong to groups which tend to like her, or go to church every Sunday to signal you're a good Christian, or wear giant ear gauges to signal... I'm not even sure what those signal, probably nonconformity and a rejection of normal beauty standards. And while people in each group will see these as good qualities, people outside the groups may consider them weakly positive, neutral, or even negative signals if they dislike that group. You can't send signals favorable to every group simultaneously, so choosing one demonstrates some level of solidarity, loyalty, camaraderie with those people in particular.
Personally, I think Apple products are decent-ish but overpriced relative to their quality (or equivalently, low quality relative to their price), and have unfriendly business practices such as making all their stuff incompatible with other brands when it would be trivial to have otherwise, especially when they do petty things like change the shape of their usb cables so they won't plug in to non-Apple devices (and normal usb cables won't plug in to Apple devices). As such, I consider ownership of Apple devices to signal some combination of uninformedness, susceptibility to advertisements, and hive-minded prioritization of signalling over substance. A person who buys things because they're cool instead of because they're useful. So I treat it as a (weak) negative signal and respect people with Apple devices slightly less. But also I'm a weird nerd and I am neither cool nor popular, so people who send those signals are in fact successful in signalling that I am not one of them, they are part of a different group, and that's probably the signal they want to send. If everyone wanted to send the same signal then money would be the only hurdle, and you're correct that it's not all that much money so not a strong signal. But by choosing an arbitrary product that's worse in some aspects you select for people who care about the signal strongly enough to make arbitrary choices in exchange for status with the group, and exclude people who just choose the best product and don't know or care about the group. And that becomes part of the signal and its cost.
Ha, yes. I myself would go farther and say I think the same for any kind of modification like tattoos, piercings, or nose rings, but I realize that's more objectionable than just making fun of giant ear gauges.
I hear your logic, but I'm still skeptical if it applies to more than just the margins. My belief is that people in aggregate tend to be fairly rational when it comes to their self-interest, and I stated as such at my original post. Take two examples. One, it may seem irrational for WEIRD voters to support BLM riots when doing so threatens safety, which should be more fundamental than any other value, but the reconciliation is that the riots don't tend to take place in the suburbs where said voters live, and so all the smashed stores can be safely written off as someone else's problem. Two, look at ESG investing. Even though universities and unions are avowedly in support culturally, socially, and politically, their endowment and pension funds don't blindly go all-in on ESG, because when money is on the line, people tend to stick to maximum returns.
In other words, while I see many of the same problems in iPhones that you've outlined, I wouldn't go so far as saying that their users actually think they are inferior to Android, but that it's a trade-off they're willing to make for status reasons. I think the vast majority genuinely believes iPhones to be superior, and anti-features like incompatibility with Androids or the closed ecosystem are seen as pros.
Don't forget that popularity within a group is itself a source of value, otherwise nobody would ever spend any money on it, so it's entirely consistent for a rational individual to pay more for a functionally inferior but socially superior (for their social environment) device if the sum of both effects end up positive. iPhones aren't massively inferior to android devices, they're close enough that the functional difference can be outweighed by the social component without too much pressure. So I would consider this comparable to the BLM supporters: there is a negative effect but the actual effect on the individual is small enough to be outweighed by social forces.
Now, I don't believe that all or even more iPhone users explicitly believe that they're inferior but use them anyway because they're cool. That's not how signalling usually works, usually there's some element of cognitive bias (halo effect?) going on such that individuals rationalize the behavior as being actually superior in all aspects. Even in cases where two products have genuine tradeoffs where one is good at certain things while the other product is good at different things, rabid fans will incorrectly attribute all good things to their thing and all bad things to the other thing. Or in some cases dismiss the faults of their thing as unimportant while the superior thing is what actually matters.
I don't think people are perfectly rational, or perfectly irrational, but instead are some mix of both. If tides somehow magically shift to make Androids cool and iPhones uncool, without any of their functional qualities actually changing I expect more than half of existing iPhone users would eventually switch to Android, and simultaneously convince themselves that Android is superior. It would take some time, as habits and built-in biases can be slow and stubborn, but I expect it would happen. And others would stick to iPhone devices because they genuine prefer them (and others genuinely prefer iPhones but would switch anyway out of conformity).
I guess the way I'm modeling it is to assume that everyone is mentally doing a weighted sum on all the evidence in favor of each side, and coolness increases the weight people place on evidence in favor of the cool side. So if one side is massively superior according to the evidence, people will side with it regardless, but if there's a small change then enough coolness on the other side will outweigh it, and the smaller the difference in evidence is, the smaller the coolness needs to be to make up the difference. But all of these calculations are done implicitly and in the end the person mostly just ends up concluding that one side is "better" without a full rational understanding of why they believe that.
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