Seems the signals are mixed about what is ok and what is not ok, and people are going back and forth on that.

More importantly, what happens when something is not "ok", and for what level of ok-ness?

    1. A client that spams people's Twitter streams without asking? Obviously not
    ok, loss of API token.

    2. A client that alters people's stream to include affiliate links? Presumably
    not ok, loss of API token? (Questionable)

    3. A client which "enhances" people's stream by making semantic clarifications
    to content? Example: Imagine if http://twitter.com/english50cent could be
    programmatically generated from @50cent. Is this not ok? It's certainly
    innovative. What are the consequences? Where is the line?

    4. A client that displays the Twitter stream verbatim but comes up with a new
    visualization? Sounds like this is not ok too, since it might "confuse"
    consumers? Do you lose your API token for this?

    5. Generally, someone builds something that Twitter didn't think of and gains
    mainstream usage, what is the consequence? What is the risk of Twitter making a
    policy against it and shutting it down due to inconvenience to them?

The Twitter team invented the medium — 140 character limited messages with a very specific style of graph-based visibility.

The rest of Twitter's mechanics were invented by third parties. @replies were not invented by the Twitter team, nor RT's, nor hashtags, nor search.twitter.com (acquired), neither was the Twitter iPhone app (acquired), neither were url-shorteners (t.co copied tinyurl, bit.ly, etc).

Many of these mechanics came specifically from third-party consumer clients. Someone came along and made a client where words prefixed with a hash were searchable on Summarize, and now Twitter's entire business model seems to be based around that.

What would have happened if Twitter said "don't make any more clients, we got this" before all this happened?

What's going to happen if Twitter says this now, before who-knows-what happens?

Twitter's greatest strength has been in recognizing value and innovation created by the community of users, but suddenly this changed. I really hope Twitter reverts their policy/suggestion, and apologizes to the community. Right now it comes off as very arrogant, presumptuous, and stifling to innovation and further progress.