I'm also suffering from the same kind of situation - while I'm not a poor student, with the US -> UK exchange rate still up at 1.8, we're talking $368, which for personal use is a hell of a lot.... went looking for purchasing info after using it for 5 mins, partly because of the nag, but mostly because it was so f'in good!!
The dongle idea is good, however, that still promotes the fact that users of the free version, or even a cheaper non-commercial version, would be faced with a nag notice. However, what I'd recommend is something along these lines - three different levels:
1. Unlicensed, free - the general public.
2. Licensed personal use - people like me.
3. Licensed commercial use - VJ's, Night Clubs, etc.
Doesn't sound like anything new so far, does it. However, with levels 2 & 3, if it's not being done already for the current commercial licenses, collect registrant information and have it displayed in the software. Show the user name (and company name if applicable) that it's registered to, and the registration date, along with the non-commercial use only warning for the personal version.
It's not a perfect deterrant, but it could help a lot. Use of encrypted registration keys could help, more extreme methods (building it into the software) could prove too costly for the effort.
I realise this opens up a whole new bunch of questions, but I think if you offered a cheaper personal-use option, you'd get more cash coming in, because there are going to be a lot more personal users than there are VJ's. WinAMP shows 263,048 downloads so far of the R4 plugin, making the (somewhat wild) assumption that those are individual users, if 0.01% of those users registered, at $25 a pop, That's $650 in your pocket. R2 is in the Top 25 downloads, R2e & R4 in the Top 100 - sounds like there's many satisfied users out there who could shell out a few $$$ without being horrendously out of pocket.
To an extent you're still putting a good amount of trust in customer honesty, and it sucks that there's dishonest people out there, it's a problem faced by the entire software industry. I still think though that the number of users out there using it illegally is still low enough that you're only losing out by not offering the personal registration option. I could be wrong though.
... Finally, one other alternative which has already been suggested, is to build in such features for the commercial version that the section of the market it applies to would be stupid not to shell out - things like the DMX support, the ability to talk to Live PA software, multi-display support (if not already in there)... I'm not in that business, but I'm sure there's other features that would be appreciated.
So.... I'll shut up now.
