Tobold made a post recently talking about how the Real Money AH (RMAH) in D3 is tantamount to cheating. It allows people to defeat things they have no business defeating and ruin the experience for others because they know that other people have cheated to get to where they are. Tobold would much rather simply enter a cheat code and beat the game that way rather than having to insert real money into the game to cheat. To consider a new player buying expensive equipment 'cheating' you pretty much have to consider cheating to include things like trading equipment with other players, trading equipment between your own characters or perhaps even getting lucky and finding a fantastic drop with a very low drop chance. Anything that appeared on the RMAH could just as easily be sold via the gold AH and the player could have bought it by simply farming up a lot of gold, so are we to consider the AH in its entirety 'cheating'?
Blizzard is being extremely careful to not have anything for sale except that which is generated by players. The fact of the matter is that people want to pay real money for in game items, which you can plainly see by the plethora of D2 sites that sell gear. Blizzard is simply making sure that when these trades between people occur they don't get players ripped off and they don't get accounts stolen. They are making an alternative trading mechanism that *will be used* secure and safe. If you can't stomach a new player buying an item you must find the idea of a veteran player giving a new player a gift unacceptable too since either way the new player has not 'earned' it. Certainly some people would rather that there be no trading of items at all to preserve their single player experience but I say faugh to that. You can ignore the AH entirely if you want and those players who do use it have absolutely no effect on your play whatsoever.
One other thing that Blizzard is doing masterfully is making sure that the economy will never be saturated with the best possible items. Virtually every item in the game is distinctly random and even those with names have variable properties. The Grandfather (a named two handed sword) might be hell on wheels but can you really tolerate a Grandfather with 25 Precision when some copies of the Grandfather have up to 28 Precision? This was very cleanly illustrated back in vanilla D2 with the Tarnhelm. Tarnhelm had a Magic Find that ranged from 25 to 49% and 49% Tarnhelms were literally seven times as valuable as 44% Tarnhelms while Tarnhelms below 35% were perhaps a quarter of the 44% versions. No matter how good your gear is you will always have something to improve upon and there will be a great variety of things to buy and upgrade. This ensures that the market never gets stagnant as there is a huge amount of granularity leading up to the best possible items. I also really like the fact that so many of the best items have many random stat types and values - there will be no 'best' set but rather a complex equation to solve based on what you have on hand.