It's not so much scaring them as your potential users may not have heard of the extension so development with a "bad" extension is key but I think good keywords can make the difference.
ccTLDs sometimes make me shy away from a site. I didn't know the official site of Daemon Tools (Daemon-Tools.cc). When I Googled it and saw the extension, I didn't believe it and went to Wikipedia to make sure it was the official site. I'd probably choose #3.