What exactly do they want from Graf is unclear - at least to me. I'm no lawyer and English is not my primary language so the legal speak confuses me somewhat. The way I understand the issue at hand is that SONY has yet to establish any proof of guilt, and the quoted 1 million is just their estimate of the damages incurred. I think it's been worded like that on purpose, to discourage anyone from helping Graf in any way. Whether or not he will have to pay anything and how much is yet to be seen.
I don't think it's smart of him to continue releasing stuff right now. Sure, most folks see this as the ultimate fuck you directed at SONY, but that's not the real issue here. Problem is, the guy has apparently been court-ordered not to do anything of the sort until the matter is resolved properly. Going against court order is just plain stupid because it's punishable and SONY could even drop the case now and Graf would still have to face charges.
Obviously SONY has the upper hand here. They can hire lawyers and ask for court orders - and this will, in theory at least, shut people up. If the lawyers somehow find a way to sue hackers and win, it's good for SONY. If not, they'll just say "Oh, sorry mate, carry on." - and get away with that. You see, their tactics might simply be to stall, it would take years to clear things up and by that time PS3 will become obsolete. So it's a win for SONY as well, said hackers are unlikely to have the resources to properly fight back and, as I just said, going against a court order is a bit suicidal.
So, we determined that the court order might be just a gag and it's issue unjustified. Don't hate the judge though, he is just doing his job. Sure, these people have their own views as well, and that does affect their actions (even if it's not supposed to), but they are mostly bound by laws. It does take a good knowledge of the law to make a compelling argument and SONY can afford to hire entire teams. A "hacker" will seek the cheapest legal council :) Though, I must say that Geohot has a good lawyer on his side and can sleep better, but SONY is not yet done with him.
Anyway, I think it's now a bit more clear why I decided to stay off SONY's turf and not, for example, release VMU emulator for PS3 system. Call me a chicken, but do understand that it's not just about SONY and their precious "next-gen" console. I could as easily get sued by SEGA. While reverse engineering of owned hardware is legal, it's pretty much impossible without breaking some software anti-piracy laws. I wrote about that in detail some time ago so just to remind you - it's like with DVDs. You can make a backup copy of the media, in case it gets damaged or something. But to make a copy you have to overcome the copy-protection systems and that's illegal. So, in the end, your right to make a lawful copy is just plain dead.
By the way, I had a good laugh at people who got angry with SONY latest PSN licence/TOS. The wording isn't all that different now, you know, most of the nasty stuff has been there since day one. And you take offence now? Well, I suppose now you actually read the terms. Or at least it has been pointed out to you. Maybe this will improve the awerness in general populace that this stuff is legally binding agreement. Don't bitch about your rights being violated, you accepted this willingly. All your base are belong to us, sucka, mwahahaha.