That's how it works. If mail isn't paid for it's made unavailable to the recipient.

I don't know how long they hold onto unpaid mail, but I assume they eventually destroy it, or open it, remove anything valuable for auction and get rid of anything else. Maybe if they're lazy, you might get something non-valuable for nothing if you know what landfill their waste goes to, but I expect they'd at least shred it.

Chances are they don't get valuables all that often because if the contents are valuable, someone's probably going to want to pay the price of postage to get it... and whoever sent it probably put the right postage on it in the first place, dodgy stamps notwithstanding, as well as a return address.

And that last part is why the policy is for the charge to go to the recipient. The postal service often has no idea who sent a letter, only where it's going.