Azuriel discovered the magic of the Diablo 3 auction house. Which actually doesn't come to much of a surprise to anybody who ever used the auction house in World of Warcraft to equip a low-level alt. Basically the equipment you can buy on an AH in any of these games is significantly better than the equipment you are likely to find yourself, without being all that expensive. Thus you can make these games much easier for you by twinking your characters with AH-bought equipment instead of the equipment they find. Which then makes one of the major motivations of the game, collecting random equipment, completely obsolete.

The problem has three sources. One is the very nature of trade. Two people who trade with each other will both be better off afterwards than before the trade. This is because things are worth different amounts of money to different people, and if they trade some item for a price which is higher than what it is worth to the seller, but simultaneously lower than what it is worth to the buyer, both sides win. Thus in game terms, even the most balanced game with trade would make characters stronger than exactly the same game without trade. The larger the market, the stronger the effect, thus the region-wide Diablo 3 AH will have a huge effect.

The second source of the problem is a game design where a given item is worth a lot to one character, but very little to another. If you find an item your class can't wear, it is only worth as much as the materials into which you can disenchant it to for you. But it might be extremely valuable to a character of the class that can use it.

The third source is the fact that if you are level X and kill a monster of level X, you don't usually find items which have level X as their minimum requirement. Normally you find somewhat lower stuff. I don't know yet how extreme that is in Diablo 3, but in World of Warcraft your random drops while leveling tended to be much, much lower in minimum level, and thus power. So if you find an item of level X-5, that is probably not worth much to you, but quite valuable to somebody of 5 levels lower than you.

All this together means that if you find a bunch of items while playing Diablo 3, it is near certain that if you sell these items to other players and take the money and buy other items with it, you end up being more powerful than if you had only worn what you found for yourself.

There is a serious risk here that many players end up rarely wearing items they found themselves. At which point the nature of item collection changes: You just find stuff for sale, which isn't much more interesting than finding little bags of gold. Instead of wielding the legendary sword of uberness you received from killing the evil wizard in the mountain of doom, you wield the legendary sword of uberness with the price tag still dangling from its hilt. That simply doesn't feel quite as heroic.