A lot of api providers seem to have a few limited (mostly lame) use cases in mind. Developers by their nature are creative boundry pushers. Conflict is inevitable.
I just wish api providers would take greater care in thinking about and describing what exactly is going to be allowed and not. Rather than putting something out there, having developers throw things at the wall, then banning things you don't like after the fact.
But they don't, it's a painful lesson to learn.
I would think that being able to operate that way is exactly the reason you want to offer an API. So that your users can come up with ideas for you. Trying to anticipate up front every conceivable use of an API and publishing it with a huge list of rules based on conjecture makes for a pretty crappy API.
First I used the reddit api, when reddit cut that off I was able to crowdsource a data feed from users through a browser extension.
Then reddit convinced google to have unedditreddit removed from the app store. I switched to a firefox extension now so we will see what happens.