I agree that it seems to be an ethical issue rather than a legal one.
I'm coming down strongly on the side of the users, though. Hashicorp chose the original license, and the one they picked is perfectly fine with the idea of someone else building off it. I mean, it was written by the Mozilla folks. They want people to build off their projects and make a nicer Internet!
Hashicorp could've used a different license if they wanted to. They deliberately chose one that gives users the rights to build on Hashicorp's work -- and yes, even to profit off it at a competitor. What I don't think HC has is the right to act shocked when others use the software under the terms they were allowed to use it.
I think its the ethical side, rather than the legal side, thats more complicated...the contributions from the community contributed to the Terraform "brand" that got bigger and bigger, and now Terraform is attempting to secure their monopoly on capitalization of the brand when previously there was an implicit understanding that the "brand" was open-source.
However, you might also argue that there was an implicit understanding on Hashicorps side that the community wouldn't build directly competitive projects when they held the lions share of the funding on the contribution/maintenance side...
I think the whole thing is pretty complicated - is Hashicorp leeching off of the contributors or are the competitive contributors leeching off of Hashicorp? Honestly I see both sides.
The beautiful thing is that its totally legal and acceptable for OpenTF to do their own thing and continue Terraform under their own terms...so either way we get to see this play out :)