It seems to me that Craig is trying to balance making CL wide-openly available to individual people while preventing a business ecology from growing on top of it. He is all for the latter, and really hates the former. In contrast EBay thrives on the business ecology it has created. (But then I think Craig is a socialist at heart -- and bless him for it!)
So, while I am sorry that a bunch of cool hacks got shut down, it might be a pretty reasonable decision on CL's part to cut off Yahoo Pipes. Plus, it's his site to do with it what he wants...
(There is some great interview with him in Wired that got linked here not too long ago.)