There was a story called "Owned Teacher" that was started and abandoned by author Thumb. Someone called slavenick made some inquiries, came to the conclusion that Thumb had died (this is the way I remember it, the details are in Story Feedback in the upper part of the Forum), and wrote and posted some additional chapters. When lex ludite brought to Jinn's attention that a new author was usurping this story, Jinn removed the added chapters.

As a writer-wannabe, I would be pissed off if anyone else wrote stories using my characters. I'd be irked, but not seriously pissed, if they set stories in my world using their own characters.

(As an aside, I think slavenick's work was better than the original.)