I don’t think any app store or payment provider would look fondly on a process that refunds that many transactions just because you want to turn around and double/triple the price. Credit card companies/payment gateways hate mass refunds and normally it could be cause to terminate your contract. To refund people because the app was forced to go out of business is one thing, but if you want to implement a price increase the supported way is what the developer said: to announce it in advance for next renewal.

Probably what you’d have to do is close the current app and publish a new app with the new business model (subscriber-only at a higher price). The amount of people who would move to such app would only be a tiny fraction of the previous userbase (as most app users were free before), and now you keep having to deal with this chaotic company who could just change the rules again at any time with little/no notice. Plus you’ll never get the kind of reach you had before without the freemium model. I think most indie devs would likely choose to just quit and move on with their lives. If someone wants to buy his code from him and publish their own subscriber-only app, probably it’s an option.