The main problem here is that in the situation described you would indeed pretty much be an idiot not to make your app free and get revenue from ads or other avenues.
Not as a capitulation to piracy, but because you'd make more money.
Possibly, but it strikes me as unfortunate that someone would have to force ads on their users just to be compensated for their work developing an application.
Not as a capitulation to piracy, but because you'd make more money.