They were temporarily suspended, and reinstated after investigation.

Would this sequence of events have happenned if it was an average joe nobody cared about, rather than a public outcry?

It works in the same way that dumping your GameCube games and running them on Dolphin works… It’s quick and easy, but it’s against the ToS and requires breaking DRM.

Steam’s DRM is weak, and in some interviews some Valve developers even gave hints that this is on purpose. Many Steam games will simply run without Steam if you just double click the .exe in the install folder, and the vast majority that only rely on Steam’s DRM can be opened by running a free “Steam Emulator” software that pretends to be an active Steam account with a correct license.

While you’re not wrong, by that logic, it’s actually fairly trivial to take my Steam downloads drive and run it on any computer even without my Steam account.