It would be very interesting if the main dev actually got paid to delete everything. Although it looks like a "dick move" at first, if you know the source will live on and you get retirement money. I would be very pressed to accept if in that situation. Much more likely they just offered to not sue him to oblivion.
I honestly don't blame Nintendo for angling emulators with everything they have while the hardware is current. They have much shittier behaviour when interacting with the community, like suing tournaments that used mods and threatening others.