The stupidity in this situation is that Creative got all hot and bothered over something that was actually improving the performance of their product(s). In my opinion, the company's decision to try to intimidate a 3rd party modifier of their drivers package was terribly short-sighted and poorly-calculated.
I still don't understand what they stood to gain other than the speculation that they (Creative) were sitting on a yet-unannounced product that would have included all the disabled features in the current X-Fi driver package. While this is, of course, a business decision, it is also extremely cynical and clearly shows just what Creative thinks of its customer base.
I don't care if he said he was going to use the money for new sound cards and new drivers. He was still accepting money for his work, and that's wrong. Besides, I have personally never heard of any programmer accepting money, or "donations" for being a third party programmer without the express written consent of the company for whom they are programming.