They certainly can (and probably should) charge for the api. The problems we see now are the communications surrounding it, the price and the timeline.
A lot of those mods held polls in their communities and among their peers before going dark. I don't think the large subreddits are getting unilaterally shut down.
Harm to the brand is hard to quantify. We can only assume they've done the calculus and decided freezing out 3rd party apps is worth the benefit. Knowing exactly what that benefit is, is conjecture. Best guess is that this is regarding the IPO which is expected in 2nd half of this year.
As a side note: the brand is clearly on their mind, as they've made exceptions for disability features. Banning Redreader would have caused quite a bit more uproar.
They can be forcefully re-opened at any time. Based on the internal memo, they don't appear to be taking this seriously enough to warrant that kind of action.
Offtopic: is there an on-prem alternative for Discord? Is there not a demand for SSO enabled, self hosted, open source communications app with persistent voice chat channels with pushtotalk?