Mikehallam: Unless I'm missing something, you're rather assuming that one is staying in the circuit - in my experience, if the runway heading is suitable, it is not at all unusual to climb and depart on runway heading.
Generally one climbs at Vy initially at least for the purpose of getting some air beneath you - in a performant type, such as the RV somewhere with a long runway you'll hit that 500ft well before the upwind threshold. I confess I'll normally flatten off a bit and continue a 'cruise' climb at that point, but I never was completely clear about the early turn - turn crosswind at 500ft after takeoff and you'll have aeroplanes on crosswind at all sorts of distances - I've always considered it to be more of a geographic consideration.
So far, I'm thinking I'll be more careful about using available climb performance, more aware of the crosswind join, and more diligent about lowering the nose every so often in the climb. As an aside, I do wonder if the presence of 'ATC', might be prone to making people relax the lookout a little too much in the assumption that they are 'separated'. I don't know whether the typical tower has a radar picture, but I tend to believe they're in a worse position to observe all the traffic than I am..