[darkmighty]

Yes, they are. For example, extend your percentage to 1% instead of 25%. Then it becomes obvious you would be just putting a burden on consumers with actual moders profiting only marginally, and the activity as a whole will tend to decline, since it'1) less attractive as an economical activity, 2) less attractive a hobby, since that might be seen as a low paying job instead, and 3) less attractive for consumers given poor/scant products. The 25% is a milder version of this effect, but I don't find it hard to see why people were upset.

http://en.wikipedia.org/wiki/Rent-seeking

It also appears to have created quite a feud among moders which were or weren't going to charge for their work, since some mods are quite intertwined.

So it was a combination of effects. I do think the basic idea is worth of discussion, but it's certainly debatable if anything other than pay-what-you-want actually fosters the moding community.