I'm leaning more toward "incompetence" as the explanation for this. What good does it do Reddit to leave RIF intact, but simply disallow logging in?
Reddit's value depends on content creation and interactions driving ad views. Read-only RIF users create no content or interactions with the site. And for many like me who purchased the premium ad-free version, we see no ads.
Admittedly, I'm not sure if the RIF ads in the free version are Reddit's own ads or not, but without the content creation, and the interactions driving more engagement, RIF does little but drag on the site.