Good question. Lately, with the whole dev license agreement thing, it seems like they couldn't care less who they upset. But I think that that instance and this one (if Apple do choose to hurt Gizmodo) provide bad press to a relatively small part of potential Apple buyers. It's obvious everyone at Giz either loves or hates Apple so I don't think their readers' opinions would change much.

I do think that Engadget took the high rode by passing this opportunity up. Yea, it seems like a big scoop now but in 3 months it won't mean anything.

I suggest that "crushing Gizmodo" wouldn't do a bit of damage to Apple. People already talk heavily about Apple's behavior regarding their non-notebook mobile devices (and respective software). People who don't take part in the scrutiny and worship of the industry don't give a shit. Even most of those in the latter category don't care enough to make a difference, or they massage the idea in their minds until they can see it as justified.

Why would this be any different, especially given that it's in the case of a company that knowingly partook in illegal trade?