You can use an iPad offline but that eliminates like 95% of the use cases - most apps require the internet to function properly.
While this is true, it's ALSO a portable device, so being able to use it without the internet is very, very valuable. Admittedly this doesn't apply as much to a comparatively bulky console, but still.
I would bet money that without the always online elements of Diablo 3 that it would have sold half of that.
I really, REALLY doubt that. Maybe I'm seriously underestimating pirates here, but the game would've likely been de facto always online if it had an offline mode anyway: they'd do the same thing as Diablo II and bar your offline character from online play, and to play with friends people would still want to be able to play online. Though I guess I'd need to see the numbers of how many played online with other people versus alone.
Also I can't help but wonder how many are really overestimating how much you even need to be "always online" for content protection. On PC maybe, though it's probably not worth the cost in the end, but on consoles? Unless they keep easily being hacked they should be able to be secured on that front, and if they get hacked these people would probably hack or figure out a way to kill the dialing home unless they ran a good chunk of the game remotely, and then at that point the problem becomes that you may be blowing too much money trying to prevent piracy and thus LOSE more than you would have otherwise.