If an inside rabbit has lots of space or free-ranging time I would think it has as good, if not better quality of life as an outside bunny. It will certainly get more human attention/interaction, simply because it is easier to sit on the carpet and play with your pets than sit in a run with them.
From reading on here, many house rabbits get time in an outdoor run too. The main advantage of an outside hutch is that you can have a setup where the rabbit can go in and out of a run as it pleases. Our run is on tarmac outside the back door, so our two are not exactly living life in the great outdoors anyway. I have a friend whose rabbit stays out in the garden all day, and night sometimes when they can't catch it - I'm a bit jealous of that arrangement, but it wouldn't work for us.
I think the issue is not so much inside v outside as one of space. No good being an outside rabbit in a 2ft by 2ft hutch 24/7. Similarly, on other sites, I have seen people's house rabbit set-up where the animal seems to be locked in a small cage for all but a couple of hours in the evening. The posts often start, "Why does my rabbit hate me...."
You could say that cats and dogs are outside animals - but we think it's cruel if someone chains their dog up in a yard all day and night.
If you have the time and the space for an inside rabbit and can cope with the chewing, pooping, etc. , I don't think it is cruel.