By saying that respect has an element of fear to it, there is a difference between fear and terror.
I agree that horses live in the moment but they do also have a conscience and some have a sense of humour.
When I was running a busy riding school, the ponies would generally be very good. I could have them in the arena with a ride of novice riders, if one was thinking about taking advantage, all I had to do was to call out "Eh!" Or wave the lunge whip and they would instantly stop whilst non of the other animals would bat an eyelid.
Another time when I had eight young horses in a big loose barn and one of them turned their backside to me to kick at feed time. I instantly used the bucket with the feed (most was already in the long manger) to drive it away. I hollered and ran at the perpetrator who shot across tha barn. As did all the others. The innocent group stayed in one corner whilst I chased the kicker. They never bothered when I went past them nor would they let the naughty one into the group. They knew they were 'innocent' and the other had to take his punishment. ( which was just being chased and driven away)
As soon as I stopped they moved back to th feed and when I walked back into the barn a few minutes later, I could walk up to and scratch every one of them.
That youngster never booted out at anyone again.