I'm sorry you're unhappy with the change. We spent quite a while considering this, and it's the best solution we could come up with for the safety of our users. As has already been mentioned, it's still very easy to install extensions. It's just a few extra steps per install, or some additional configuration by the user or administrator. However, we're always open to better proposals.
As for how the WebStore is handled, the story you linked to seems to show a positive resolution. The extension was improperly flagged, but the developer appealed and his extension was quickly re-listed.
It is absolutely not "still very easy to install extensions" outside of the webstore. If it were then how would this be a solution at all? The reason you're calling it a solution is because you're making it so much harder that it will happen far less frequently.
I don't think anyone would claim it's hard to drag and drop a file into the extension manager window. Yes, it creates enough friction to stop the typical drive-by download attack, but it's not a difficult operation.
The change adds support for configuring off-store installs, in addition to changing the default configuration. So, an enterprise can add a list of trusted install sources and distribute it through global policy, Puppet, etc.
As for how the WebStore is handled, the story you linked to seems to show a positive resolution. The extension was improperly flagged, but the developer appealed and his extension was quickly re-listed.