The point is that you must look at the actual numbers - cost of scaring some people away vs. how many new users this brings in, to actually "get it." I've seen this exact technique work extremely well many times before.
Building a successful site is absolutely not about giving users everything they want, how they want it. That line of thinking can be very damaging to your site.
Maybe you are right, but if everybody would be thinking like that, there would be no Linux, only Microsoft.
Some people crave a pure solution. For me, a web site that employs the trick above loses my trust, and I will never really feel comfortable in using it anymore.
Building a successful site is absolutely not about giving users everything they want, how they want it. That line of thinking can be very damaging to your site.