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Y'all seem to be absolving the large company here.
I like Baen, but they made a mistake too. They thought they had the power to do this, and that Bujold had given informed consent. Or that if she was missing something, she'd continue to do so in future. They were wrong, and there's now (a small amount of) adverse publicity floating around on the Web.
Then their response to the mistake (whoever(s) it is) is publicly interpreted as blaming their author. Maybe it's a refreshing contrast to modern PR, and there was no point (or some legal risk?) in saying more. But there's a valid discussion about free material, and they need to have it with their authors. A short "PS. Lessons will be learnt" might have been useful.
They could definitely have done without the aggro. I'm glad they're enlightened enough to let Bujold sell through Amazon while they're can't, but that's got to be causing some tension.
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