I'm unhappy with my Master's. Should I drop out?
I think to really enjoy academic life, your motivations should be academic, and I now realize that my motivations certainly aren't.


No human being can -- or should -- have only academic motivations.  In this statement I find a kernel of truth: "An academic career is not a good one for those who are not motivated by a love for and a desire to work in their academic subject."  But also I find a kernel of falsity: "The only worthwhile reason to have degree X in subject Y is a love for and a desire to work in subject Y."  That's really not true: in modern life, degrees -- and increasingly, "advanced" degrees like master's and doctorates -- are necessary credentials in order to attain any of a variety of non-academic jobs.  

If I understand your current situation, then:
(i) With one more year and with full financial support, you can complete a master's degree.
(ii) If you drop out now, then not only do you not get the degree but you will have to pay a financial penalty.  (So you say, anyway.  In the US, students who drop out of a degree program do not have to pay back their stipends.  It sounds like you are outside of the US.  It might be worth exploring -- carefully -- whether this is actually true in your program.)  

In other words, looked at in non-academic terms you would be paying a nontrivial amount of money for the privilege of extricating yourself from a master's degree program and sparing yourself one year of doing something that you do not enjoy (but are doing well in; you seem not to doubt that you could get the degree with one more year of work).  Okay, if you drop out of the program right now, you will do....what??  If the answer is that you have a lucrative and long-term job lined up now, it would make sense to drop out (and try to put your degree on hold, if possible).  If you do not have something specifically positive lined up but are just looking to release yourself from the drudgery: I don't think that's a rational decision.  Ten or twenty years from now you may well look back and wish you had finished the degree.

I am not going to pick apart your entire message, but at several points your reasoning seems predicated on faulty assumptions.  Just a couple examples:


  I had previously worked in industry and didn't have much of a pleasant experience, so I believed I would fit right in to academic life.


That makes no sense to me.  For many values of X and Y, liking X is positively correlated with liking Y.  I have never heard anyone say, "If you don't like this, then I know you'll like..."  I have a friend who made the same mistake in the other direction: as an academic he found himself weighed down by his colleagues' and superiors' expectations of how he should spend his time and conduct himself: he found these expectations both too numerous and too nebulous.  So he switched to an industry job to correct it.  Suffice it to say, he didn't stay in that job for terribly long.  There are (at least) two problems with this reasoning: (i) There are more than two walks of life...many more.  The majority of human beings are not working in either academia or industry.  (ii) Not all forms of unhappiness can be cured by any change of location.  Some of them are more internal.  


  The upside in dropping out now is that I would gain a whole year to actually focus on my life, 


Not being a graduate student is neither a necessary or sufficient condition to actually focus on your life.  Try focusing on your life while completing your master's degree.  Yes, it's challenging...but worthwhile.


  I've also been told that every grad student thinks about quitting at least once, and I know many others like that, but that doesn't make the situation better. Actually, it makes it worse for me, because it seems that nobody has any confidence in their work, and nobody is expected to have that confidence whatsoever. I find that extremely unhealthy and demotivating.


Then I have good news for you: in five years of graduate school, I never thought about quitting -- not once.  I had my better and worse moments, and yes -- at times my confidence lagged -- but I was at all times completely confident that I was doing what I wanted to be doing with my life.  My graduate school cohort consisted of people who were amazingly (indeed, intimidatingly) competent, enthusiastic and successful: the vast majority of people around me reinforced my interest and inspired me to work harder.  You don't sound like you're in a very positive cohort.  If you did decide to stay in academia past your master's degree (which I am not recommending if you continue to feel the way you do now, but it is possible that you could have a change of heart), you should make it a priority to place yourself in a positive academic environment.  It makes a world of difference.

Good luck.