How is that any different than how I used to pump quarters into Street Fighter II arcade games back in the day?
To the level I've got, plenty of things would be easier if I was willing to spend money, but I haven't found anything I can't do for free.
To generalize it, its easy to get a handful of people to do something. If you offer it to them for free, there are plenty of people who will go out of their way to advance as far as possible. Once those people start getting friends involved, the friends will want to get that far too. By offering them a quick advancement in exchange for money, you can then make a tidy profit.
This is blackmail later on. (You want to do better at this game? Sure, we can fix that for you, just pay us some money).
From the couple of games like this I've played, it is still entirely possible to hit the limits of the game without spending a dime. It will cost you quite a bit more time and effort, but still possible.
Its more akin to an arcade game where the first play is free, but if you want a continue you have to pay a quarter each time. Sure, its a little bit shady, but its still a valid way to get money from a user. Look at all the sites/service that use a freemium model. Look at things like DropBox. Is that blackmail, since you will eventually fill up your free 2gb, and have to pay for it if you want more?
It's not the same as freemium at all.
A game, where you're competing against other people, that operates on a non level playing field, is unfair. Allowing people to pay money to progress faster in the game is taking advantage of peoples idiocy.
Imagine going to the arcades, playing street fighter II, and it saying "We know you can't get on the score board because you suck, but if you pay $20 we'll put you at the top of the score board anyway". Would that be completely fine and above board?
I fail to see how charging money for faster progress is taking advantage of idiocy. As another example, look at television programming. I can get a half dozen broadcast channels for free. If I want more, and want to get more out of my tv watching experience by having more choice in it, I have to pay for cable, who then offers me various packages, depending on how much each of those channels is worth to me.
It doesn't make it idiocy to value things differently than other people. I value $10 a month more than HBO. Does that make all of the people who pay for HBO idiots? Does that make all it blackmail for the cable company to offer a trial of HBO when I sign up (admittedly, that practice is slightly shady, due to the difficulty to stop the channels after the trial, but that is a completely different issue)? Just because you put more value on your money than others do on a shiny digital fish doesn't make them an idiot, it makes them someone who values shiny digital fish.
-To your edit:
Well, if that was the way things were from the start, sure. Say you go to the arcade, and pick out your game to play. To make this all fit well, lets pick tetris. As long as you know from the start there are various "powerups" you can buy throughout the game, it seems totally fair. Its 1 quarter to start the game. Later in, you can buy various powerups, like double points for one level for another quarter, or the ability to choose your next block for a quarter.
Does it make things different? Yes. But it certainly doesn't make them unfair. The options are open to everyone, those at the top and those trying to get there. Its fair, but is a little shady.