Jamie misrepresents several things in his rant
His apps were definitely not the first two 3rd-party apps submitted. Palm approached some developers and vendors in the fall of 2008 and had them in process already. One of the apps that came out of that process was the Spaz twitter client. If Jaime had bothered to pay more attention to things besides porting dali clock to yet another platform, he would know that it is an open-source app that has been available both in the catalog and as source since long before he had his freakout over the "no other distribution" clause. My own app is open source, and Palm hasn't given me any trouble about it. The newest agreement specifically mentions distributing source code as acceptable as long as you don't charge for it.
The way it reads to me, the reviewer contacted him about the ipk (closest thing there is to a binary file for webOS) being available on his website, not about source code. Aside from the financial incentive issues, a malicious developer could get a clean copy of an app onto the catalog and then distribute an ipk that included malware, and users could be duped into thinking the file was okay since it was also listed on the catalog. Rather than discussing the issue with the reviewer or anyone else or presenting his concerns or questions, Jaime threw a fit.
The fee is certainly an issue people can debate all day. It comes down to two things, a filter to reduce the number of "my first app"s being submitted and reduce the flood of apps to just those who are at least a little serious about it, and a way for Palm to cover some of the costs involved. Even if it's a free app, it still has to be vetted, and then there are the hosting costs. $8.25 a month is hardly a bloodletting, and the entire development environment is provided for free even if you choose not to pay the fee and submit app through Palm's channel. Perhaps more important, Jaime conveniently doesn't mention that the current fee being charged for developers already in the process is only $5 for the first year. Not wanting to use Paypal is another issue, and it's a reasonable question as to why Palm chose only one method of paying the fee and verifying the developer as a "real person". On the other hand, the alternative would be for Palm to develop their own payment site and some sort of step to make sure there was an actual entity responsible for the legal obligations of the agreement.
Jaime also very much misrepresents the homebrew side of things. First of all, Palm has been at least hands-off, and if anything supportive of the homebrew community. Several free apps have already made the jump from homebrew distribution to Palm's app catalog, and one developer that I know of who was using undocumented internal api's was told by Palm to keep distributing it as homebrew until he either removed the offending portion or the api's were opened up. The biggest part of this aspect though, is that the homebrew installation process is not hard for users at all. You download a little app and type in one string on your phone then plug it in. After that, you can browse all the homebrew apps on your phone and download them as easily as the official catalog.