Quote: "they're not making money from the GB game, so its no harm to them"
Wrong, it's still stealing. Look, I work for a games company and a couple of years ago, someone wrote to them asking if they could make a Half Life mod based on one of their old games. They
HAD to say no. You don't understand, possibly, but if you let one person away with using your brand without lots of money/permissions/supervision/lawyers, then
people will use that in court in future against you. If Nintendo let one fan game away with it - why not let them all away with it? The main problem is that if there is prior example of other people being allowed to use your brand without paying for it, then evil-money-grabbing-nasty-companies will have something to show in court to say "But everyone's doing it!" when they heartlessly rip off everything every Zelda fan has ever come to love, raping the brand for every penny/cent/yen/monetaryunit it was once worth.
So, if you want Nintendo to lose control of the Zelda brand, so that any two-bit company reels out Zelda 'games' of terrible quality, anyone with a pencil can draw 'Zelda' art of dubious quality or content, or any filthy flybynight porn-makers can make Link/Zelda porn with impunity - then keep on pushing for the 'right' to steal brands.
It sounds harsh and DEEPLY over the top - but that's what Nintendo (and any other brand holder) has to watch out for. It's not 'being evil to fans' - they're not doing it to spite anyone - they're doing it so that they won't get horribly ripped off in court one day.
Again - the game looks great, and there's always something deeply compelling about a game/film world you love that makes you want to be a part of it and show it to others in a new and exciting light. But don't be surprised if things like this get C&D'd - and please don't think that just because there's no money involved, that it's immune. It's not.
Very sorry for the thread hijack, just trying to squish a myth.