The problem comes when you present all these restrictions as part of a big platform of values, progress, improvement etc, and then do an about-face the moment your competitor says "no that's dumb".
All Sony did was keep the status quo, and Microsoft could not defend their new policies versus the status quo. That sends a terrible message about Microsoft's original argument, and their reasons for pushing it. If this vision was so crucial, why is it so indefensible? If this was worth doing, why is Microsoft so quick to walk away? If this was something that would benefit the consumer, as Microsoft originally claimed, why aren't Microsoft sticking to their guns, telling us how much better things will be this way? People have been complaining for months - why did the announcement come only after Sony lay their cards on the table?
Until now, the Xbox brand has been largely able to disassociate itself from the frankly toxic brand-values of Microsoft as a whole. This fiasco has managed to undo all of that. I think this is almost certainly a better move than sticking with policies which clearly weren't intended to benefit consumers, but I don't think most gamers will forget.
This E3, Sony were the guys at the party who were fun all night, but stayed classy and came round the next day to help you clean up. Microsoft were the guys who vomited on your couch, broke your TV, and came round offering to pay for it a week later when everyone unfriended them on Facebook.