Well, I'm disappointed by this, but at least it will save me a lot of money. The only reason I shelled out money for first or paid to upgrade was the third bag. Frankly, I was bringing stuff back to Colombia that I really didn't need or can buy here at a small premium vs. the USA, so I'll save some money by not buying unneeded stuff too.
This also frees me up to be a price shopper. I'm not going to say that this change will make me switch airlines, since AA has generally been the price leader or pretty close to it on my routes. But, if that changes I'll have no reason to try to hang on.