One Radical idea I would try:
1 ) Create a new "NO AH" softcore mode, and increase drop rates in those games to compensate for that change.
1 - expected change) better for people who want to play Diablo as a single player experience and feel like buying equipment in the AH is "cheating" (regardless of whether or not you feel that way, how a player sees them self in the game and expresses themselves in the game is incredibly important). I creates a valid way to progress through the game for them that will be successful. Because the AH is technically required (as the game has been designed around its use, it is required), a mode to turn it off would help that player base feel more validated by the game.