Look, I want stuff as cheaply as possible same as anyone. But saying $2.50 is the limit to what "anyone" should be asked to pay is a pretty strong position. You don't know what my gaming budget looks like - if I've got a good income, $5 could be pretty much irrelevant to me. The purpose of DLC is to provide an additional revenue stream for the company, so the pricing of DLC should be whatever nets the most additional profit ($5 might be on the high side, but I have no data whatsoever on this and neither do you - we're both just extrapolating from our own budgets). Setting it at $5 instead of $2.50 will certainly price out some people, but it won't price out others and we have no data available on how many people will be priced out. It could be 5%, it could be 95%.
I'll say what I said about DLC before launch - if it's not worth it to you (Babylon at $5 isn't worth it to me), don't buy it, but at least appreciate what DLC does for gaming. The cost to create a game has drastically increased over the last 10 years, while the price to sell a game has increased by much less. You have to sell a lot more copies to break even than you used to have to sell, and many games have always fallen short - it's a boom-or-bust industry. DLC puts more games at or above the break-even mark. That makes games a safer investment for the people with money, and that means more games made. This is true even on the obvious megahits, since the big hits pay for the flops and pay for companies taking risks; more revenue for game companies means more money going into new games.
The alternative to DLC is jacking the base price up to $70, $80 or whatever for no additional content. DLC is, overall, better for gamers than the reverse situation, since you can at least say no to it without passing on the game itself.