None of us are disputing that the USDA definitions of the marketing terms are potentially misleading to consumers buying eggs off of a grocery market shelf - but your counter proposal, that a fence, no matter how far distant from the hen house, is definitionally not "free range" is equally absurd. Your definition is synonymous, effectively, with "at large", with the attendant legal consequences that follow such a definition. Joe and Jane consumer are not exactly the definition of well informed, and probably shouldn't be a standard we look up to, in a country whose average IQ is below 100 (a point on the scale supposed to be defined as the average).
As a term of Art, used by hobbyists and backyard enthusiasts, while it lacks specificity, it does still serve a use in communicating some (very vague and generalized) sense of the the speaker's poultry management practices. For that purpose, I'm perfectly wiling to continue its use - understanding that is as descriptive as, for instance, "blue".
Aqua? Midnight? Sapphire? Azure? Cobalt? Navy? Ultramarine? Lapis? Indigo? Cornflower? Baby? ...