We have the domain widget.com and have been offered the widget.net version for $3000. (which is about 10% of what I paid for the .com 3+ years ago)
My question is would it be worth it to us to protect it from competitors or would I be better off if a competitor purchased it and promoted it with the thinking being that he would be branding my .com site?
I don't know what I would do with it besides redirecting to our main (unless we loaned it to a nonprofit "product association" that we work with for the branding exposure and possible tax write offs?)
If you have a keyword domain I wouldn't care about branding to much, a keyword domain is very difficult to brand. On the other hand if you have a brandable domain name, then I would worry about branding and likely buy it.
But I also would consider how much traffic the .net domain got, how many links it has, how high the PR is and how many of my customers are likely to misspell my domain name.
I'm also in the buy camp - even if it's a keyword domain. Having a competitor coming in on a .net domain with the same keywords would be very uncomfortable... with a keyword domain it's very unlikely that you'd get any form of trademark protection.
I would try and buy it if you can - particularly if you are doing well at your .com, and you are the main destination for that keyword online. It may seem like a lot of money, but you could also put up an alternate site with some of your content altered slightly (10 to 15% changes is a safe number I think). Even if you just put up 10 pages and got 5 or 10 clicks a day on each page, at the going rate of about $.10 per click - that's 5 to 10 bucks a day in purchased clicks you would save. Within a year the site would pay for itself if properly optimized.
And if that fails, you've still protected yourself from a company buying up the .net and creating a site that manages to outrank you and syphon away your existing traffic - who knows how algorithms will change in the next few years. I also agree that plenty of people still type www.whatever.com and www.whatever.net interchangeably into the search engine and/or browser address bar.