1. The loss of source codes does not make HotA an official version = just as it was a pirate version 10 years ago (on par with TE, Wog, WT), so it remains. There is a very big difference between lost source codes and an open-source product.
2. The copyright holder's statement about closing the series simply means that there are no plans to release sequels.
3. The fact that HotA is free is not grounds for violating the same copyrights (it's just that in our realm-state, everyone truly doesn't give a damn about anyone).
4. HotA is not installed on top of a purchased SoD, but is distributed without purchasing it, posted in open access for downloading.
5. If the HD mod can still be considered "modding" with a great stretch, then HotA is no longer "modding," but cracked and rewritten game code.
6. Thus, HotA was, is, and will remain a pirate version exactly until the copyright holder shares the rights to use the brand itself (and he won't share them — negotiations were held).
And I don't see any problem here: I am simply calling things by their names.