I'm not a lawyer, and this certainly doesn't constitute legal advice, but there are a few points that I want to clarify, based on dozens of comments from several WotC business managers on down to lawyers who produce game material:
Kid Charlemagne said:
But no NEW stuff will be produced.
It won't happen. Quality will suffer, as the current crop of professionals adapt or leave the business, but there won't be a cessation of people using the Open Gaming License as long as there's a gamer who thinks they can do it better.
If enough people do as you propose, WoTC will have two choices:
Let D&D die as a business. Which means that eventually, D&D dies as a game, except for a few people running 20 year old free content off the web.
I would certainly hope that D&D is a viable enough commodity for someone to purchase and make active. It's got too much recognition not to. Could you imagine the name brands of Kleenex or Charmin, or Hardee's or McDonald's lying fallow for years with no one using them?
or create a DND 4.0 that is incompatible with 3.0/3.5 and revoke the OGL/d20 licenses.
The Open Gaming License cannot be revoked, because version 1.0 of the license, and all currently released material as OGC under it, is open to use in perpetuity. The d20 System Trademark License can be edited or revoked, and we lose the d20 trademark that ties so many products together, but that's all. 4th edition could certainly be all closed content, by WotC not releasing another SRD for it, but the existing market will still have complete authority to make the license sink or swim according to supply & demand.
EDIT: The third choice, as Philreed has pointed out, is for "crippled" OGC to become the industry standard, in order to make it as difficult as possible for people to strip out the content.
Which do you prefer?
Sadly, I think this is the most logical choice. Because the license cannot legally distinguish between "end user" and "publisher", legally there's nothing wrong here. In truth, it makes more sense to do it in Malhavoc-style than just releasing everything carte-blanche; the original content MUST be purchased to have the original material without gaps, yet publishers can do the (harder) work of using a good mechanic as needed. However, asking a publisher to not change his or her practices when the 99% OGC they published is being reborn in another product with a title change is being unrealistic.