Polarity, out of curiosity, where did Sirlin say that? I've never really seen him post much about Smash (yet).
Anyways, to respond to your post, I've had ideas of why Mr. Wizard would go about putting items on in tournaments, and that confirms many of my thoughts. Items not being on in this tournament is NOT a matter of brokenness any longer. They have established amongst themselves that the "unfairness" or "brokenness" of items is not enough to warrant a ban. They are correct, to an extent, with that thinking. However, I have addressed that issue in one of my posts that I continually respond with; Items-on versus items-off is NOT a matter of banning items. It is simply a setting within the game, much like time or stock. Many people cite that items are "random" or "broken" as reasons for why they aren't used in competitive Smash. To a point, that may be true, but the best reason is simply because this is the setting that the competitive Smash scene enjoys to play with. I've continually asked them to not look at this as a matter of brokenness, but they have either ignored me, or more likely, have other reasons for having items on.
So let me list out the reasons I believe EVO chose to put items on in their tournament:
1. They aren't "broken"
I have just addressed this above.
2. The rules for competitive Smash are too complex, and need simplification
Simple rules make smoother and easier tournaments, and give newcomers an easier time adjusting to the competitive scene. This is true. And trust me, the future ruleset is going to become increasingly complicated. I can see why, from their perspective, that this is a bad thing. They are used to fighting games where they only need to emulate the arcade versions and they are good to go for tournaments. But Smash isn't made to be a competitive game. Smash was meant to be a party game, but ended up being much deeper than anybody could have possibly expected. Yet, because of what Smash was meant to be, we have inherent balance issues when we convert it to a competitive game. Thats the entire idea. We, the competitive Smash community, are collectively converting a party game into a competitive game, almost like making a new game altogether. In a way, we are almost like developers (albeit with limited options). As developers of competitive Smash, it is our responsibility to tweak the game and make sure the game is as fair as possible for all parties. Smash is not inherently balanced for one on one situations in a tournament setting like normal fighting games are supposed to be. That is why Smash is unique in terms of rules, and requires a unique perspective from other fighting games. We are responsible to balance this new game. This is a tough job given what limitations we have in the game. Which is, unfortunately, why our rules are so complicated.
3. Smash is a huge game now, and SRK is missing out
This one is actually from a business standpoint. Those behind SRK have seen how popular Smash has become. They've seen the incredible growth in the community and the size we have grown to be. SRK is supposed to be the best place to go for nearly every fighting game out there. But not Smash. No, they didn't like Melee or 64 very much in the past. So, they want to open their doors now that Brawl is out, and try to get a piece of the Smash pie. But between SWF and AllisBrawl, who would want to go to SRK? There is no reason for yet another site for Smash. But, with Brawl, there is an influx of new people. Many of those new people barely know how competitive Smash works, despite wanting to be a part of it, and are likely still playing with items on, because they can't figure out why they've been banned. That is SRK's ticket to a new community. A niche that has opened with the release of a new game that will allow them to be a source that none of the other sites can provide: An alternative ruleset, with items. While they may be losing out on us, they are actually investing in the future. If they had a tournament using our rules, why would anybody stick to SRK over SWF? They would definitely have a bigger turnout, but their own community wouldn't grow very much at all. With items on, they're hoping that this becomes a long-term investment, by planting a seed they hope will grow. And you know what? Its smart from a business standpoint, and I can't fault them for thinking that way. But from SWF's experience, there really isn't very many people interested in competitive Smash with items on, and this new community they may or may not build, probably won't last very long. But who knows what the future holds. They may actually succeed.
4. This early in the game, Brawl is just not very fun to watch
Every Melee player, and many Brawl players, all complain that Brawl is so boring to watch. Many players play overly defensive games, and the entire game itself just plain runs slower. If you've ever seen videos of EVO, you'll notice the crowd cheering when something awesome happens. That is one of the biggest appeals of EVO; a game that is fun to play competitively AND is fun to watch. I've heard that Melee at EVO last year was awesome... for Smashers. Some SRK members are adamant that anybody who wasn't in the Smash scene just plain didn't enjoy watching the Melee finals. They didn't know what was going on! And the same applied for Smash fans to other EVO games. The majority of people who play Smash have only really played Smash at a competitive level. Hell, many of them likely haven't even played MvC2 before. So Smash fans don't really watch the other games as much, and they don't really "add" to the EVO spectatorship. But they can at least alleviate one of those two problems. The game boring to watch for EVO regulars, Melee, just became more boring to watch. But throw in something like items, and now the game speeds up a bit. There is more speed, more action, more things going on, and overall more fun to watch. Also, if items are on low, then that really doesn't matter. An item every now and then really doesn't add too many items, so its still not entertaining. But what about a steady stream of items every 8-14 seconds when you up the spawn rate to medium? That is definitely more crazy, and will definitely provide a better experience for the people watching who never liked watching Smash before.
5. They honestly believe they can create a better competitive Smash than we can
This is one of the few truly negative points here. They believe that with all their "experience" and "intelligence" that they would create a better version of competitive Smash than we at SWF can. Like I said before, the community is essentially the development team for this new competitive version of Smash. The guys behind EVO/SRK don't like our competitive version. And they think they are better "developers" than we are. This is truly a smack in the face to every person who considers themselves a competitive Smasher, and is one of the main reasons so many people are up-in-arms about this entire issue. It takes a special and deep kind of arrogance to do what they are doing.
I'm sure there are more reasons than that, though. I even forgot a point or two while I was typing that all out. But I honestly believe that no amount of logic, evidence, or debate will change what EVO is doing. Its unfortunate, but its true.