That… isn’t how these kinds of things work?

If there is legal precedent, it is a no brainer. That is why you don’t use pirated software. https://www.technicalactiongroup.ca/these-companies-used-pirated-software-and-lost-millions-of-dollars/ is a random source i found that listed a bunch of legal cases.

But if we are in a grey area based on whatever vague “with hacks” nonsense was going on?

Company sends you a C&D because they decided what you are doing is piracy. They basically say “Give us money and we won’t go to court”. So you either give them money or try to go to court. At which point… setting aside a bit of money for a lawyer would have been a good idea. Wonder where that great advice came from.

The legal system in most countries (arguably all but I am sure there is a weird niche case) is inherently going to favor the large corporation with a team of lawyers on retainer. Which lets them more or less bully individuals and smaller companies to settle out of court which means that precedent is never actually established. That is where emulation generally lives, for example.