There's also a no charge "express edition" of the IDE, but it was heavily crippled last time I checked.
That said, Xcode 3 doesn't satisfy the requirement of being easy or quick to install for a casual user.
Casual users =/= developers
Quick on the other hand, how many 4.5gb installations are quick?
I don't want to paint this as black & white, because things rarely are, but on the continuum of free (as in freedom) vs non-free, you'd have to live in a cave on the moon to still cling to the idea that Apple is anywhere near the free side of the scale.
You, as a developer, have to make a decision about how you will support your principles. Apple has certainly made theirs. They view their entire platform as theirs to do with as they wish. That is the anti-thesis of freedom. Do not expect this to change.