All this C&Ds and shutdowns are possible, because whole WOW private servers community are against each other.
Turtle WOW owners have long history of scams (gold selling) and DDOSing other servers then buying them or something like that.
Warmane uses unpatched RCE in 335a client for their own Anticheat (yes, rofl) and their custom content changes.
Project Ascension, worst Pay2Win there is. Someone said they have more employees than there is Blizzard employees working on Wow Classic.
------
Wow private servers run for decades now and nobody ever did something to "fix" copyright infringement.
Every private server linked or hosted Wow clients directly on their websites.
Servers emulators (which are not emulators, wow community just call them like that) are ok, since they're re-implemented only from packet communication between clients and official servers.
Problem is copying dungeons (raids, scripting) behavior and other things.
There wasn't any motivation to fund development of opensource wow client, this way only players would broke copyright, if they would be required to provide client copyrighted data by themselves.
And over time, it could be also redone more even now, with LLM.
Hosting private WOW servers always was about making huge money and very quickly, I know people with multiple houses and cars only from hosting one server and they never ever did something custom like Turtle Wow. You could just download opensource wow server implementation, rent a server, setup payment gateway and the hardest thing was to come up with the cool name for your server :D
It's easy, because players have no problem to start on new server several times per year, since that's all they do on their main private server. There is reset each year and they're usually waiting when some raid will open etc.
------
Nobody sane would player on official Wow servers, Blizzard is openly supporting botting and real money trading.
There is even opensource bot coded by Microsoft employee :D
I agree with your first statement, this match what I've witness when I learned coding by doing my own private sever.
But I can ensure you that my motivation wasn't money, and I don't think it's the case for most starting projects. How ever, with success come temptation, also if you can easily justify getting some cash
I could hire some dev, I could get a better server, do some promotion, etc...
And then when money arrive it's hard not to feel all your hard work doesn't deserve a bit of the share.
To me the main issue is that there is no legitimate way to license blizz IP and give back a share.
TurtleWoW wasn't a simple "recycle the content and don't pay for retail" type, and those are actually a lot of work interesting take on the classic game.
It's a shame there are no good legal way to make a legit business to explore those ideas more seriously and for the "private server scene" to grow up in it.