If the market was completely transparent, that would be the case, but that's not how it is. For example Yfrog: it looks absolutely terrible, but still it's very popular. If I made Twitter I wouldn't be happy about that.
A new normal Twitter-user (some who doesn't read HN, basically) might think something like this: "Oh, so this is where you post images on twitter? Doesn't look great. How do I login? Ah nevermind, I'll go back to Facebook." At the same time, TwitPic adds something to Twitter, in such a way that it fits in with it.
Bottom-line: users will connect 3rd-party apps and experiences to the API provider, so Twitter is right in making clear that they don't want crappy apps.
