For a successful offline mode that doesn't doesn't increase the risk of item duping they'd probably have to have completely different coding for single player item dropping.
Duping is a valid concern, and like it or not the AH is a feature a lot of people like.
Personally I would love to see an offline mode, and if I were running things it'd have one. Not that anyone would ever let me run any sort of game development but hey I can dream
I guess my point is this isn't some black & white good vs evil issue. Blizz isn't some Snidely Whiplash villain, twisting its mustache while cackling as it ties customers to a railroad track. They were trying to offer desirable features and attempting to control for some of undesirable consequences of having those features.
To me the bigger issue is that they failed to provide adequate infrastructure to make sure the game runs smoothly for most everyone. Specially given that they went the no-option always on route.