Here's my thoughts on everything:
A) I Really hope the fallout of this doesn't cause Square-Enix to decide that - since the Cease & Desist against releasing it was technically ignored - they need to in the future take a more slash and burn stance with their fans and stop everyone from making anything just to make sure something like this never happens again.
B) The user over at GameFAQs named "Jowy Blight XXVIII" is, if you'll pardon the language, being a Grade A Douchebag (TM). Whether or not he knows the proverbial 'friend of a friend' (of which it seems highly unlikely), he doesn't seem to know the first thing about ettiquette or sound arguing. My advice to him would be to stop being a Douchebag, and also learn how to write a coherent sentence, if you ever want anyone to take you seriously. I am very sorry you have to put with someone acting like that at a time like this.
C) Somehow, I excessively doubt this is the real Masato Kato.
A) Indeed, it'd be very bad. However, I don't think they could really turn into those drastic methods? That could probably bring them a bad image. Taking into account that other companies haven't gone that far for the fanprojects of their games as well.
B) Agree on that. He seems so sure of himself being right... I hope he's just bluffing about contacting SE, if by actually doing so will mean some bad stuff to come.
c) Well, yeah, just suddenly posting and using his actual game... yeah, can bring some doubt. But if it really isn't Kato, well, it does seem well elaborated for a hoax especially considering the linked image and 'Runmaru' sign and that, and I have no idea about the Japanese in there... who knows...