I'm extremely surprised that they're doing it, but I'm glad that they are. Their fans seemed to have responded for the most part very positively to this. I think this solves a ton of issues about the game, especially considering everything they're doing with loot 2.0.
Also, I have to ask, why are you so persistent on posting news for a game you don't play, especially for the AH? I'm just curious.
Oh, and by the way, I think this was an incredibly difficult decision for Blizzard to make. Blizzard has grown a little more stubborn over the years, I think as a side effect to growing so large and successful. But, I think this speaks volumes about their willingness to correct their 'mistakes' and improve their games if they are fundamentally flawed. Anyway, I just have a lot of respect for them for changing something that is 1. risky and 2. so difficult to do. They have to completely change the way trading is done and remove the AH entirely, and also face 3rd party consequences for doing so.
Blizzard wanted to sell copies of the Diablo III expansion.
They weighed that desire for profit against the revenue they were generating from the real money auction house of a game released almost a year and a half ago in a heavily saturated games market (i.e. people tend to play a game for a short while then move on to the next big thing).
Looks like the potential revenue from expansion sales won out.
I'm not saying it's the only factor (I'm sure the positive reception of the console version of the game played a role as well), but it certainly had to influence the decision.
And speaking of the console version: Diablo III for PlayStation 3 and Xbox 360 features gamepad support, offline play, and no RMAH...which makes it a game I would actually consider buying if not for the occult content (which is a personal decision and not one I would try to impose on others) and $60 price point (though patience and Amazon sales could resolve that problem).
But for now, I'll stick with Dungeon Siege 3. DS3 was 5 bucks on a Steam sale when I bought it, it features gamepad support and local co-op, and I've really been enjoying playing it with my wife. It's not on par with Soma Bringer (then again, what is?), but it's been a great game to play together (though the camera is occasionally obnoxious).
With there being an auction house (either gold-driven or real money-driven) there was no need to increase the drop rate because people could just buy their loot. With the auction houses going away the standard means of gearing up will be gone and it will have to be replaced with something else (higher drop rates). On the flip side, I wouldn't be surprised if they lowered the gold netted from questing and killing mobs.