I agree with your overall post, but to correct a few details -- LV 1.0 was interpreted, but ever since LV2.0 released in 1990, it has been compiled. It compiles to machine code for various architectures. It doesn't need to generate C source. It doesn't do so primarily because C is such an unfriendly language for multitasking.
NI does sell an add-on module which allows targeting a wide variety of 3rd party embedded devices by generating C source and then using the vendor's C compiler. It was introduced maybe eight years ago, well after RT. That is not how RT works or how the desktop works.
Greg McKaskle