So how long until someone else makes a free, open source version...?
Not very. Lots of shops have nascent versions of the underlying mechanism in Reflector; for instance, if you need to instrument .NET programs for testing, you have a good chunk of it.
On the other hand, Reflector has a very effective UI, and $35 isn't even a rounding error. There will be more free alternatives to Reflector now, but I for one will probably be happy to shell out a trivial sum of money to keep using the best one.
For fun and profit, peek into some Silverlight containers and run Reflector on the DLLs.
1) As others have commented already: The product was free with basically _all_ features already working. Sure, it might need some work to support a complete new runtime version (i.e. 4). I don't know. And, problematic in this case for the image here is that this is a mostly "invisible" improvement. You still wonder "What do they actually add?"
2) Their "update or stop using" policy is sleazy, imo. I stopped using the tool at that point, because in my world that's not a viable way to offer any product (free or otherwise).
3) Taking over a free tool with the clear and open statement that "it's going to stay free" bites you, if you back off later. I'm sure there are good reasons (commercially) for this decision now, but it still ends up as a public "Whoops, failed" for me.
No love from my side, not because of the price (I agree with you on that point), but the "image" of this tool is utterly damaged in my world.
I only hope they don't timebomb the paid version like they did the freeware version.