The devs obviously agree that its fair too, otherwise they wouldn't "give away" the fruit of their labour. Duh!
I'm sure the whole deal will change when and if they want it to, but I think they've got the balance just right for the moment. LFS has something of a cult status due to the demo - that kind of cultural capital is useful in many ways, especially in maintaining an active brand image over the period of LFS' uniquely long and drawn out development process.
Its taken the music industry a long time to appreciate the fact that free downloads aren't a loss. Quite the opposite, they generate excitement, and consequently demand, for a product. Stamping your feet and sqawking about how its so unfair that people are getting something for free, (ie. unnecessarily restricting the nature of currrent demand) is the best way of wrecking the 'indie' status already aquired by the development team.