Did you even play Diablo 2? If the AH did not exist, drop rates would not have to suck like they do now. No one is asking to get legendary's every 5 minutes, but people like me have been farming for 2-3 weeks and literally getting nothing. There is some inherently fucked up about that.
I have over 200 hrs in this game, and mostly everything I have that is good has had to be bought from the AH. I do not like the AH, I do not enjoy selling, and I certainly would rather be earning my loot through the game then resorting to the AH. But it's 100% necessary, there is no doubt about it.
So to simply answer your question, without the AH obviously drop rates would be marginally or significantly increased to some degree on blizzards end. But whatever AH is not going away, nor is the RMAH. I already am finding new games to play. I just find it ironic and sad that a game based on loot, forces you to buy stuff from the AH instead of earning it yourself. It's the best feeling seeing shit drop and realizing it's an upgrade. I get no joy from buying uber shit out of the AH, there is nothing fun about that for me.