So even model aircraft that are operating 400 feet AGL and below over private property are indeed operating within the "national airspace system.
Tell me the law that defines this "national airspace system". I do not believe there is one. It is only referenced in the FAA's educational material. Kinda like the drivers manuals that are taken for law, but are not. The drivers manual says that you shall not exceed the speed limit, but if you look up the law you see that they cannot issue a ticket unless over a certain amount and so far past the speed limit sign.
If they rule everything that flies, then why did the Judge throw out the Pirker case? They said the FAA had no right to regulate the FPV plane because there was no regulation covering it. So obviously it is not automatic that the FAA currently regulate all that flies.