Many things that PC gamers have been able to do for years have become more and more limited because the publishing company sees these things as lost revenue. The mod days are still around in some niche games from indy devs, but in any mainstream title, modding or making any changes to the game at all is completely shut down, even if it is something the community wants.
Eventually, Blizz will probably incorporate features from Loot Alert into the game itself if enough people want it, and it will ultimately make them money. From my understanding, the ping for legendary weapons now, is largely based on what Loot Alert started doing some time ago.
I'm not going to use Loot Alert, but it has many features I would like some version of. I'd like to be able to customize what I see drop and how I'm notified of those drops. There's another ARPG game out right now that already has some of these features and also allows modding. In other words, it's very customizable.
I enjoy D3, and I plan to keep playing it, but the lack of customization in this game, very much removes the Personal from Personal Computer.
As for third party programs, it's a violation of the ToS, and it's stated pretty clearly. Use at your own risk.