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The thing that annoys me most about megaupload is that it was run by a scammy douchenozzle fraudster glory-hound who few people will feel sorry for, regardless of the ethics or legality of shutting down the site. It's like the DA using bogus evidence to pin a murder on a convicted child-rapist, it might be wrong but who's going to defend that guy?
Good point, this makes for a dangerous precedent, but the unsympathetic defendant will make it easier to convict.
It's worse than that. Add in that the FBI accompanied New Zealand police (or, according to our quasi national paper "led the raid") and it feels a whole lot worse. http://publicaddress.net/hardnews/the-mega-conspiracy/
Dotocm and three others were arrested after an FBI-led raid at the mansion, which he leases, on Friday morning. The FBI is seeking to extradite the men to the US to face charges of conspiring to commit racketeering, conspiring to commit money laundering, copyright infringement, and aiding and abetting copyright infringement over the internet through the website Megaupload.

That's the quote, here is the source. http://m.nzherald.co.nz/technology/news/article.cfm?c_id=5&#...

Given that there are literally dozens of sites out there doing what MegaUpload does you suspect that it may have been picked precisely because of that.

One possible silver lining is that people like that rarely go down without a fight and it sounds like this is a case that can be fought. While his net worth will always be the subject of some uncertainty (to put it mildly), if he chooses he almost certainly has the resources to mount a defence.