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Of course they'd politely request that the book be taken down. But there've been plenty of cases of folks asking in Usenet groups (that happen to contain mostly pirate activity*) for copies of Baen eBooks. And the other folks who frequent those groups of told the requester to "just buy it -- it's cheap and they get it."
Their philosophy is to offer books at a reasonable price, providing good value for the money. They think that most folks would rather have a legal copy if it's cheap and convenient to do so. You know: treat the customer fairly and with respect and (most of them) will do right by you in return. And, so far, the results in the real world have worked just that way.
As for whether or not they'd be losing money on those 1000 hypothetical unpaid downloads, well... that's one of those imponderable questions that's really hard to answer in practice. In theory, the subset of downloads that actually displace a sale that would otherwise have taken place represent "lost sales." But it's essentially impossible to figure out what fraction of the 1000 are lost sales and what fraction are people DLing something they would otherwise never have paid for because "it's free."
It's worth noting, however, that Baen has put CDs chock full of eBooks in quite a few of their hardcover books. Those CDs are clearly marked as being free to copy, give away, or share, but not to make money on. And there are a number of web sites that have complete downloads of everything on those CDs; with the publisher's blessing! And yes, those CDs have included things like every prior book in the 15-book series that the HC is the latest of, along with nearly everything else that author has written. So they're not particularly worried about folks getting free copies.
Xenophon
*I'm not saying that anything about all, or even most Usenet newsgroups. Rather, the specific binaries groups in question happened to mostly contain pirate activity.
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