Recasting is a process whereby someone takes a prop that has already been made and makes a copy of it. Props are sometimes 100% fan created, sometimes are found items (e.g. a henglster counter that they bought), or from a private collector prop such as a screen used helmet that someone bought at auction.
The whole argument against recasting is to protect prop makers that we depend on for our hobby, pure and simple. Let's take the case of a fan made item such as TM's armor. He put an awful lot of labor in to making this and by selling copies does the rest of us a favor, as creating your own fan sculpted armor is out of reach for most folks. By recasting his work it is a dis-incentive for him and others who do fan made props to offer anything up for sale. No fan made props heavily curtails our ability to enjoy our hobby. So member of this community go out of their way to protect this person's art work as we'd like to be recipients of his labors.
The same holds true for someone who buys a prop at auction. They own the item, and if they cast and sell it the community protects their interests in exchange for him selling them to us.
On the other hand, some people don't care about being recasted. As has been noted recast items tend to be of inferior quality, so it's up to people to decide what they want to buy.
Also, some people kind of opt out of the community and lose the protection of the community. Some retire, some sell their work, and some just make such an an impolite person of themselves in terms of integrity that they are – for lack of a better word – excommunicated.
In the end it’s about reciprocity. The community protects folks who add value to our hobby, and by value I mean not just the goods but also the service we receive. Recasting TE or CAP is pretty acceptable because TE has pretty much pissed off everyone and has thus “exited” our community. CAP because he just doesn’t care, and also that he recasted someone who is not “in the community”. If CAP had recasted TM then I can assure you people would not be favorable of people recasting CAP either.
People bring up the whole LFL angle but their assumptions are not correct. The 501st in a way does pay a “royalty” for the props we consume from the non-licensed community. We have to make no profit or take payment for anything we do, and have to abide by a code of conduct. This is the implicit “contract” that allows us to do what we do.