It's only ethical when it's not used. Creating hacks are a way to prove a point. It would have been perfectly ethical if he gave it to no one except the developers of the game.
You have to be entirely retarded to think anybody creates hacks just for the single goal of "proving" a point. Of course, that's what the real goal is but it's obvious he's going to use it. You spend any amount of time on anything you're going to want to use it. There are many other ways to be "ethical" about a slew of things without handing it directly to the developers; ZDaemon staff has proven numerous times they don't listen to what their player-base has to say so what do you think handing down a hack source would do anyway? Honestly, the only real way to grab attention is to release it. I see no un-ethical behavior in this.
You're saying that new binary releases that "break" the hack don't count? There were new releases with small modifications that were made to make the hack incompatible as a long term solution wasn't feasible at the time. It's slowly being worked on though. A reasonable time would have been much longer. Technically, I'm speaking of the time needed before the hack was released to the public. So, in this case, the time given was 0. It appeared on some cheating forums without an official notice to ZD at all.
I'll be quick to admit I haven't looked at ZDaemon's new 'binary' releases until recently, but looking at the ZDaemon 1.08.02 binary to the 1.08.03 binary looks exactly the same, therefore no measures were taken to stop it. Besides that, it's incredibly easy to just not update to .03 and continue using the hack. And yet again, what would be the over-all point of giving the hack to the developers if it wasn't first put in the publics eyes as "dangerous" addition to the game?
Any person can misbehave at any time. If a priest in a church engages in unethical doings, is the whole church responsible? Or, in government terms - if one congressman does something bad, is the whole government responsible? There was nothing that could have been done to stop him. Plus, there was already contempt. The trojan basically disabled the game - something you can expect from PunkBuster. After all, it only deleted doom2.wad (which they should have on a CD anyways).
Comparing this to a real-life situation with religion isn't that smart of an idea, but yes, on a technicality it is the church's fault for mis-leading the priest. The trojan did absolutely nothing except delete copyrighted material from the users end-PC. I see no freakin' possible way that was ethical no matter HOW you look at it, whether or not they should have a legal copy or not, you shouldn't have to worry about a person of the staff of the game you're playing at creating at a program that deletes your Doom2 and Zdaemon files.
Yet it is work. Every single bit counts. It's like why I lock my door when a truly motivated criminal can kick it down or pick it (with ease).
Work as it may be, it's just as easy to produce the same results in the same amount of time it would require to do it with the source open, and if you bothered to read the ZDHook code you would clearly see he hooks directly into the ZDaemon CL header files to accomplish many things.