When is an addon cheating?

I mentioned the Augmented Virtual Reality addon in a recent post on user interfaces. The addon allows players to communicate by "painting" the virtual world around them in World of Warcraft. Thus a raidleader can put green, red, and blue circles on the ground and tell his raid "healers in the green circle, melee dps red, ranged dps blue", and add an helpful arrow to that telling people which way to run when the boss does his special ability. Now Blizzard announced that they don't like this addon, and that they are making changes to WoW in patch 3.3.5 which are deliberately targeted at breaking AVR and making similar addons impossible.

Reactions are mixed. A commenter on Kill Ten Rats remarked that if the ability to point at a spot on the floor breaks raiding, there is something wrong with raiding. Others had already greeted the announcement of the addon as being somewhat of a cheat. But the most important question here is posed by dorfeater: Where exactly does Blizzard draw the line? It isn't as if other addons, like Healbot or Decursive, or DBM, aren't also making raids a lot easier for their users. So why break AVR and not the others?

Blizzard says "it removes too much player reaction and decision-making while facing dungeon and raid encounters. While some other mods also work to this end, we find that AVR and the act of visualizing strategy within the game world simply goes beyond what we’re willing to allow". But that is only their second reason. The first is: "The invasive nature of a mod altering and/or interacting with the game world (virtually or directly) is not intended and not something we will allow. World of Warcraft UI addons are never intended to interact with the game world itself." So the line appears to be somewhere between altering the user interface, and altering the game world, even if that is only by painting it with spots and arrows. If you want spots and arrows, you need to go to the animated guides of Bosskillers.

So what do you say? Is that line Blizzard draws right? Should they have allowed AVR? Or should they have banned even more addons?