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Pavitra comments on Community norm question: brief text ad signatures - Less Wrong
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This, I think, is the strongest argument against. Commercial links would, in my opinion, lower the status of LW overall. I don't want that to happen. I could come up with rationalizations why it's strategically suboptimal, but I know they're rationalizations, so I won't.
The complete lack of actual ads on LW does a great deal to raise the status of this website, as you say. There are basically no websites nowadays where this is possible except for government ones and others independently maintained. No matter how classy the advertisements are, there's still a certain pallor cast over the page when "tained" by commercial intent.