The big issue is that loot drops have been adjusted to reflect the fact that some players (and many bots) will farm 24/7 for items. Which basically means that if you are a regular player, you stand no chance of getting a good loot item.
Virtually, every item you get will be trash compared to what you can get from AH – be it for gold or real money.
So with the new expansion, Blizzard is saying bye-bye to the Auction House.
Money quote (pun intended):
“It became increasingly clear that despite the benefits of the AH system and the fact that many players around the world use it, it ultimately undermines Diablo’s core game play: kill monsters to get cool loot,” Blizzard Production Director John Hight writes. “With that in mind, we want to let everyone know that we’ve decided to remove the gold and real-money auction house system from Diablo 3.”