One of the reasons they added even more of the Apple ID password dialogs is because of issues like this: http://in.finance.yahoo.com/news/apple-sued-over-apps-luring... Basically, without repeated re-authorization (generally via password), accidental or unintended purchases were causing them issues.
All they need is a little checkbox "Never ask again". The never ending stream of password prompts I encounter also have nothing to do with paid apps - I don't even have a card associated with my Apple id and only have free apps.
I'll agree it's not ideal.