I'm not defending SE by any means, but to paint them as some evil company plotting to ruin fanboys' dreams is just silly.
Obviously, Square could've taken the high road and embraced the project, but they didn't. Does it suck? Absolutely. Big time, but Crimson Echoes was a huge project that was well known in a lot of circles. As soon as SE heard about it, they shut it down. They weren't looming in the shadows waiting for the right moment. CE was using Square's intellectual property without permission, and it was going to be distributed to the masses. Is it really a surprise that Square wanted to shut them down? It wasn't just a simple fan project. It was a rom hack. To even get the hack, most people would download the illegal rom of the original game. Square naturally saw this as a problem and shut it down. I think 90% of companies wouldn've done the same. If this was an original creation things might've been different, but it was a hack of a rom that in most cases (I'm talking about potential players here, not the creators of CE) would've been obtained illegally.
Now I'm not defending Square, as much as stating the obvious. I am going to defend the creators of CE though. They took time out of their own lives to create this project without getting anything in return. When a company throws a C & D at them, why should they try and fight it? Why should they waste more time, money, and effort? Not to mention the fact that their efforts may be futile. Again CE was made from a rom hack. People downloading CE were technically downloading a version of the original CT rom. CE was technically distributing an illegal copy of CT. Who knows how this would've turned out in court?
CE was a great project. I would've loved to have played it. I really enjoyed the youtube videos. It looked like an amazing game. That being said, it really bothers me when people feel they were entitled to it, or entitled for the CE team to fight for it. I hate when people act like it's so easy to stand up and fight a huge company, especially in these whacky circumstances. Trials cost time and money, even when you win.