Exactly
Well, a few of us got a C&D letter (
forge and
myself at least), and it never went further than that.
In both cases what we did was to remove the infringing content: pictures.
I respect WotC's copyrights, but be warned that their lawyers don't hesitate to lie to you, and threaten you with blatant fake stuff. They rely a LOT on the fact that you are not a lawyer to frighten you, and make sure it will make you stop whatever you're doing. That's the point of a C&D.
The truth is, they have very little legal power to terminate these fan projects (except in the US, maybe), not mentioning the bad image it would give them, and the money it would cost them to actually go to court for stupid "work in progress with a few hundred users base" freewares. Although legally they could certainly win, I believe it makes no financial sense for WotC as a company.
By the way, if/when you have to reply to these guys' C&D, the less you say, the better for you (anything you say to them can be used against you in court, this is not a movie quote, this is the truth). But of course if you are using copyrighted content that they ask you to remove, just do as they say.
My piece of advice for programmers is to have your game to be as independent as possible from the whole MTG Patents. This allows you to remove only infringing content without giving up your entire project. And again, their patent is only valid in the US.
Oh, and people who get such threats should definitely blog about it. If it gives WotC a bad image, they will stop, or be less aggressive about that.