Twitter had to kill their ecosystem in order to make any money on advertising. There was just no way to sell ads if so many users were going to be using 3rd party clients.
You may be right that killing off the 3rd party ecosystem hurt their usage, but from a business perspective, there wasn't any point keeping it if it was damaging their business model.
Not really. The vast majority of their ads are in the timeline. I don't see why they couldn't just serve those to third party developers. If the third parties try to block or prevent them then you revoke their API keys. Done.
I dunno, I think to do that they'd have to have an Apple App Store level of oversight on their third party devs products, which would be about as restrictive to the devs as the changes they actually did make, plus prohibitively expensive for Twitter.
That's not true at all. As someone who had multiple Twitter API apps killed by them, I would have welcome app store level review processes. Limiting tokens (killing any popular app) and killing games that let you tweet easily because they are too much like general purpose clients like they did was just ridiculous. The best apps I know, like Foursquare, just switched back to asking users for username and password at the time because the token limitation basically broke integration.
Seems doable. They have over 3,500 people there (really don't see why they're not at, say, 150). Surely they have enough resources to handle the necessary oversight. I would imagine most could be automated with spot checking by actual people.
You may be right that killing off the 3rd party ecosystem hurt their usage, but from a business perspective, there wasn't any point keeping it if it was damaging their business model.