HC>An author is threating to pull out after getting MSTed.

Personally, I'd be flattered if I got MSTed, even if someone
messed up my story with it. So what... it's not my story, it's
the MSTer's. It's almost like someone making a sidestory
for your fic, or like what we're doing -- writing fanfics based
on some other creator's work. 

No matter how you look at it, the MSTer had to draw from 
YOUR work, YOUR ideas, YOUR creativity, in order to produce 
something of his own.

If you choose to see it otherwise, then it's your problem.
See who loses.