That's how supermarkets work, too. They get a cut of the sales price, and if you want your product to stand out, you pay for a more prominent placement.
Well, exactly. That is what is terrible about this. The goal of App Store must be to help the user find the best product that is suited based on the search. It's purpose must be to delight it's users. The users and app authors are already paying Apple in many ways. So instead of seeing this an algorithm/engineering problem, Apple has now turned it's Store into some super market. The goal of a supermarket is hardly to "delight" you. And neither do they have your best interests in mind. When/what is last delightful supermarket you went to?
In supermarkets, they are. To most consumers, one brand of milk might as well be another brand--even if the tastes is different, it's slight enough to be negligible. So just shelving everything as 'milk' is good enough for the supermarket to handle is distribution duty. Now if one particular brand wants to do better than its competitor, it can pay for placement closer to the checkout section, or pay for a big promotional area for it.
The same might be true with apps. Yes apps have differences, but its not really clear that such differences are enough that there is clearly one app better suited for a purpose than another. Nor is it clear that you can both (a) divine the suitability of any app and (b) match that up with a consumer with any degree of accuracy versus alternatives.
If the above were true, central planning via the app store would be great. Since it's not... well our best known solution is capitalist market action which opening up the store to advertisement allows.
Supermarkets are probably one of the least usable markets in existence though. It's almost impossible to go into a supermarket without an understanding of what you need and leave better off. You have to go in with expert knowledge of everything you need. Hardly a role model for marketplace design.