Opportunity cost on users using third party apps means that Reddit has to charge them high prices to make up for lost ads revenue. That's unavoidable.

The problem here is that the price that they're asking is not realistic. Have you read the original post from the Apollo developer? They could have asked for a reasonable price, and choose not to do so.

Also, this was the original problem, but then they created more problems in how they handle this. You're menrioning GeoCities and MySpace, but we should be talking about Digg, in the sense of not hearing your community opinion.