You couldnt put ads that easily in rss feeds.

It's a decentralized solution in a world where google wants everything to go through google.

They could've added a Google-only feed type to Reader and encouraged authors to migrate to it using EEE. This is exactly what they tried to do with Usenet via Google Groups. (Google is now banned from Usenet)

They killed greader and RSS to push Google+, which was a brilliant decision.

Subscribing to RSS creates a p2p web over http. It cuts out the middleman. Who is the biggest middleman of the internet?

Ad revenue.