The "Real Money Auction House" is entirely new, and I'm not aware of any other game enabling such transactions at a player-player level. You can sell/buy stuff for gold, but with RMAH, you can do it with real money. In all reality, the market settles at a gold/money conversion rate. In North America three days ago, that was at about $1/100,000 gold.

It's not heavily based on RMAH, but if you want to progress quickly, you spend money. I don't think it's a pivotal part of the economy at all. I think it's more to make sure Blizzard gets a cut of gold sellers/buyers.

I believe http://www.entropiauniverse.com/ was one of the first games to support real money in-game.

Interesting! I checked out the website and the recent interview in their news. Seems a lot of people are actually put off by the dollar investment required for maximum fun.

Thank you for the informed response. I'm coming from Ultima Online and always wondered when a game would directly integrate the real dollar black market trading of "time/luck."

Yes, Diablo 3 is heavily based on item trading. There is a real-money auction and an ingame gold auction. Due to the loot system and drop rates, users can get much much better items from trading then otherwise. Diablo 3 is going to collide very much so with this new law.

The Auction House takes all the skill element out of the game on normal mode. Anybody even moderately interested in playing the game with a bit of risk (which also implies you are playing hard-core-die-once-and-your-character-is-dead) - avoids the Auction House like the plague when playing Normal Level.

I understand the Auction House is essential to completing the game on Inferno level, but good players can complete on Nightmare without using it. I don't know about Hell level - that's probably where there is a judgement call required.