The issue has never come up for me, but if you can write Application A++ which is a replacement for Application A, and which you're willing to distribute at a lower price than Application A (e.g. free), then the classic economic response is that the developer of A doesn't deserve to get money for it any more. They can either improve their product or do something else, not get paid for an obsolete product.
If Application A contains original ideas from that developer which happen not to have been patented, but which you believe could or should be patentable, then you might feel a moral obligation to avoid copying them. Doing so would be illegal if they were GiantMegaCorp, and if you feel that it's just for GiantMegaCorp to be protected from "theft" of intellectual "property", then you might feel it unjust that the indie developer isn't protected just because they can't afford recourse to the law. Of course there's a risk that if you don't someone else will, but the same's true of drug dealers and you don't deal drugs (I expect).
Snigger quotes around "theft" and "property" are there because a lot of people who support FOSS are in any case opposed to software patents, or to any kind of IP for software, or to any kind of IP at all. So it may be a non-issue: if someone is feeding their family by doing something you believe to be wrong (selling software, dealing crack to 8-year-olds, whatever), then you still want them to stop, don't you? Either you believe in social security (or personal charity), or else you believe that economically unproductive people and their families should die of starvation. Either way, developer A failing to earn is not an intractable problem, and that's even assuming they can't find an alternative to developing Application A. Maybe they'll go do something more worthwhile.
I refuse to say what my position is, though. Firstly I'm not sure it's consistent, and second I'd rather just offer something to think about on either side.