This is a fair point; it makes business sense from Apple's point of view to give it away for free, however the same reasoning didn't stop Microsoft and IBM in t

This is a fair point; it makes business sense from Apple's point of view to give it away for free, however the same reasoning didn't stop Microsoft and IBM in the 80's/90's to charge developers $3000 for the OS/2 SDK. In response to your second point, I would like to point out that submitting to the App Store is the only part of the process that has to be done in Xcode, which is a very tiny part of the app development cycle.