The money is used as profit margin. I think that's perfectly acceptable. Whether it be Graham Frazer and IMNA charging $425 for IMCdA or DBD charging $275. These are acceptable fees.
Honestly, I've done a lot of racing and, IN GENERAL, you get what you pay for. WTC produces excellent, predictable, safe events with no corners cut (don't everyone start bringing up IMUtah either because I think it was an anomoly). They create an carnival-like atmosphere which makes athletes and their families feel special.
In 1999, I raced a first-year IM-distance race in Ohio that was a TOTAL disaster. Too many cut corners, disorganization, and unsafe. If WTC makes a profit, but throws an event which I love...so be it. In addition, races have limited capacity so it's fine to charge whatever the market will bear.
Some RDs now believe there is a market for lower-cost events. They are willing to eat margin in an attempt to grab market share...Time will tell if it's a winning strategy.
Don't begrudge RDs for making money (they aren't getting rich...I can assure you of that). They shouldn't be treated any differently than equipment manufacturers who often make 35 points of margin on the equipment they sell.
Quite honestly, I don't think high entry fees will drive people away from the sport nearly as fast as poorly-run, unsafe events...
Just my $.02
http://wattieink.com/elite-team/ Raising funds to help wounded veterans and racing RAAM 2013 with
http://team4mil.org/ "If you are gonna charge... CHARGE HARD!"