Cheaper standby tickets (the old definition, not the one used in the US nowadays) disappeared because regular travellers got fairly savvy about which flights were not normally full, and bought standby instead, actually leading to a revenue decrease (if you do this at university, as some of us have done, this is known as "revenue dilution").
Certainly in the UK, you cannot override statutory law (eg EU261) by making any contractual statement. The law is the law. End of.