Actually... I think you hit the nail right on the head.

Thinking on it a little more, I do agree that some of its features were going too far. Things like having circles drawn automatically to show you where to go in real time or show you where everyone's range is do take away from the difficulty of the encounter. I do, however, like the ability to statically mark locations on the ground, and it seems that Blizzard does too because they have never said anything about using objects for position markers.
In my opinion, they should allow the static drawings (basically just chalk on the ground, used for pre-determined positions and planning) but disable the dynamic ones (things like range circles and automated position indicators). Those are the ones everyone is upset about. The problem is that I don't think they could do that the way this mod works. The objects are drawn by taking a player's x,y coordinates and camera angle to find out where to draw a shape so that it appears at a certain x,y coordinate in the world relative to the player, and there is no real difference between static and dynamically drawn images. It seems that the only way to stop that kind of math would completely block all addons that allow even static drawings.
My proposal is that Blizzard implement either an object or interface option to allow static drawings on the environment, for use in raid planning and positioning. I don't think these take anything away from the difficulty of the encounters other than making it a bit easier to say "I want healers to stand on the northern-most point of the third star pattern in the stonework on this fight", which is what we do now. If Blizzard creates an alternative to this addon they will get full control over it and will be able to ensure that it is used in the spirit of the game.

I guess they blocked a few drawing functions. So technically AVR can still do the math but just cannot show it on screens.

Somebody said on the forum thread that the change is to the camera info, so that the addon couldn't do the math so to speak.

Take this idea farther and you can have a DBM-like interface (Text) that tells you 'go right, now forward, left a bit, STOP!' based on your coordinates in the dungeon. This by-passes the visual requirement/ban and conforms to the currently acceptable mod arctype. The only way to stop this is by masking the addon's ability to do the math of positioning which kills range finders as well as several other useful (and currently acceptable) addons.

Blizzard has done a fair job of integrating popular add-on functionality into the core game. Perhaps we will see a John Madden style strategy planner tool soon - or perhaps a craftable item to be used in conjunction with flares that will help make raid encounter strategy more lucid without providing a crutch to players.

The change is that information about the camera will no longer be available to mods. If AVR doesn't know where your camera is, it can't reshape and resize its drawings to give you the illusion that they are on the ground.

Shefki's post on this page explains it better: http://forums.worldofwarcraft.com/thread.html?sid=1&topicId=25002150557&pageNo=8