Why not update the API contract that if you use the Reddit API you need to render the ads? If you don't render the Ads they can come up with some pricing model. Seems like Reddit's pricing is designed by an MBA intern who just joined silicon valley.
That would require the API to also include ad information. I think putting a sensible price on API access would make this a bit simpler, though (and allow for a paid ad-free experience as well). The core issue isn't so much paid API access as the price being so crazy high it can't possibly reflect how much reddit would normally be making from the users of these apps, so instead looks like it is aimed at just shutting down 3rd party apps entirely.