"How long until we are sold a complete game only to find in order to proceed into act 3 we must pay for the "optional" equipment that makes the challenge manageable?"

This is being sold by players though. Someone would have to have gotten far enough for those items to have dropped. That means it's manageable or no one could have gotten far enough to get the items. Also, everything that can sold on this AH can be sold on the gold AH with the exception of gold and probably characters. Of course the item wold have to be listed on both for you to have that choice. We'll see how it works out Soon.

Your thinking about this from the perspective of a Diablo or World of Warcraft game. The games I'm thinking of are coming out next decade where the concept of selling to players from within the game is not only accepted but believed to be essential for games to be successful.

Let say the diablo 3 experiment is highly successful. Suddenly there is another group of people who otherwise might not be interested in the game that must now be catered towards. Development time for meaningful content is lost in favor of the next virtual goods system. Do you like popups? I sure as hell don't. If not managed properly, your gaming experience could be flooded by people trying to sell you materials for making your sword bigger (the innuendo is bad but you all get it)

They already do this in many games through Downloadable Content (DLC). Quest packs are a prime example - you've played through everything available to the game on release, and want to progress further. To get there, you need to buy the next level of quests.