Why do the RFU give clubs money?

Ring-fence the lot of them and keep them away from the rest of the game.

It's fair to say that in 2003 academies were not what they are now, Martin Johnson for example began as a colts player with Wigston, one of the two clubs that became the Leicester Lions, he went to New Zealand and played iin their junior All Blacks, had he chosen to stay over there, he would probably have been an All Black. He went to Tigers as a young man and grew with the first team, never went near an academy, don't think Neil Back did either. Looking at todays likely England World Cup players, most will be from academies, some played as dr's in the National leagues to get experience of adult rugby. Jack van Poortvleit and George Martin both played for Leicester Lions in Nat 2, but we could hardly claim "we made them"

What are the financial benefits of an England club winning the European Cup?

There is prize money but I can't find a reliable recent figure and then I presume being European Champions helps in recruiting sponsors and asking for increased amounts from them.

But on the other hand clubs have to have bigger squads with the resulting increase in costs - salaries, NIC, and travelling. 

So at the end of the day, how much PROFIT does it really provide?

Good system from U-15 onwards. If my son's experience with the Saints is anything to go by, it's a very harsh regime that saw some quit the game and occasionally go to American Football 

Where do the U-6s go?

As always a strawman argument. I said nothing of the sort because I couldn't care less.

You wish to deny players the opportunity of playing at the highest level, you wish to deny clubs the chance(a very slim one at the moment obviously due to the PRL intransigence) to play in the top flight?

Your jealous hatred of everything Premiership is beginning to affect your thought process, Jersey and Doncaster have stated they want to play in the league.