I just don't understand when people decided that trading was such a fundamental component of Diablo. Trading in Diablo 2 was absolutely awful. And it certainly wasn't any good in Diablo 1, i.e. "I'll drop my hacked sword over here, you drop your duped gold over there".
D3's auction house was clearly inspired by WoW's auction house, but they left out an incredibly critical detail: everything in WoW is Bind on Equip, and the really good stuff is Bind on Pickup. Turns out, that has always worked just fine for WoW, which is a loot game at its core not so different from Diablo. I don't know where the pushback is coming from. Unrestricted trading in Diablo has always been bad from the very start - why defend it?
All legendary and set items being soul-bound is a terrible idea. Don't kill trading. Killing the auction house is good, killing the social aspect of trading is bad.
I agree with them, being handed items by your friends is generally not very fun in the long run, and that's the best case scenario of trading IMO. On a fundamental level, as long as trading is possible then the natural loot game is constantly in competition with it. Maybe killing the AH and adding soft measures like Mystic account binding will be enough to minimize the influence of trading, but what if it isn't? It's likely that someone out there will build a third party site that is comparable in functionality to the Auction House - it happened for TF2. I think that trading is a corrupting influence in these games that distracts from what the game is really supposed to be about. If I find that perfect legendary, I want to have fun kicking ass with it without having to feel that nagging temptation knowing I could sell it somewhere for $100.