Mister Guy pretty much hit the nail on the head.
In addition, while I don't debate the fact that the Deal Extreme grip is probably a direct knock-off of the Pentax Grip (it certainly looks exactly like it, cosmetically), in a fundamental sense it's got some pretty big differences.
Deal Extreme grip: Cheap grip, not weather-sealed, questionable reliability & longevity, and inconvenient or non-existant warranty support, very little or zero re-sale value, and the alienation of any recourse whatsoever if the grip frys your camera somehow.
Pentax Grip: Expensive grip, weather sealed, (presumably) good reliability & longevity, network of warranty support, decent re-sale value, broad availability, and if it kills your camera you can probably legitimately yell at someone.
While the grips seem quite similar in construction and cosmetics, those descriptions illustrate that they're fundamentally different products. Who's to say that there isn't/shouldn't be a market for both? If the market wants cheap products of dubious quality, then, frankly, that's what the market should get, according to standard free-market ideology.
The issue of the costs associated with the design & engineering for the official grip has been raised a few times; frankly, I just don't buy it... this product is an iteration on previous products, and even if you envision a 4-month long project with 3 people working full-time (an industrial designer, an electrical engineer, and a project manager), each making $100,000/year, the supposed design costs are still about $100,000. In the grand scheme of product development, this is astronomically low: Pentax would only need to sell 300-400 grips to pay off the design process. On top of this, I'm hugely skeptical that more than a few weeks went into the grip - as I said, it's a straightforward product, with functional precedent in previous products, and ergonomic precedent that stems from the camera itself; there's simply not that much to actually design given how derivative the product is. Some sketches, sculpts, 3-D models or rapid prototypes, and the product is designed, for all intents and purposes.
On the actual manufacturing side of things, we're talking about an injection-molded part with some cheap electronics and some rubber or silicone gaskets. While the tooling costs here are a bit high (mold making can be pricey), we're not talking large volume - so probably a 1 or 2 cavity mold for each piece of the grip at most, running on a small injection molding machine. The costs for Pentax to tool up for this fabrication would be the same as whoever was making the knockoff (if it's not the exact same facility), so it's not like Pentax is the only party investing capital here, while for the company producing the knockoff, it's all gravy.
Relative to the tooling costs, the design costs for this type of product are likely insignificant.
