is it a lame decision? valve was okay with the project, until the devs used a method in the closed source part of source to do something. Valve then asked them to not do that, so the dev then implemented an even worse method than the first, which Valve than C&D altogether.

valve had 0 problems with the project, other than a very specific implementation they did with source engine, was asked to fix it, but chose not to do it.