The true reason why this whole thing started was not the because they removed the key from digg. It was because they started removing stories mentioning that fact, and banning submitters, even though those stories didn’t even contain the key. Also Kevin initially agreed to Jay’s post (he actually posted it to digg, and even got dugg down!!). He changed his mind once he saw that there’s no other way than surrender.

Always remember that Digg is a business after all, their interest is to make a profit and stay as far from a lawsuit as possible. They’re not out here to entertain us - that’s a byproduct, regardless of what they say - always know that Digg isn’t entirely about the users, there’s always going to be a level of moderation and censorship held by the Digg team - hours after Rose posted his blog notice they still removed stories with the number and they have yet to reinstate Digg accounts that were banned or removed.

Here’s the interview, courtesy of Fortune.com

The Browser: Who made the call to remove the HD-DVD hacks?
Adelson: This was really painful for us to do. We got legal advice, and they told us it was a good idea. Then the users spoke, and they spoke very loudly. We got hundreds and hundreds of submissions. After what was basically an all-day meeting, watching this go on, we made the decision that we were aligned with the users.
The Browser: Kevin RoseC”b,b”s post sounded pretty ominous. What would you say the chances are that this escalates into legal action against Digg?
Adelson: I think that there is a risk. We understood that risk when we posted KevinC”b,b”s post. WhatC”b,b”s ironic is that during the event, a lot of users pointed at Digg, Inc., and said C”b,KYou guys are becoming what you were built against.C”b,b” That couldnC”b,b”t be further from the case. This issue aroused the passions within the employees themselves. We understand that it could lead to a big lawsuit. We understand that this could be end of Digg. Do I believe that risk is very high? Ireally donC”b,b”t know. The [DVD hack] information is in the public domain; it has been for quite a while. But itC”b,b”s really not about the legal interpretation. ItC”b,b”s about what we believe in. KevinC”b,b”s point, that weC”b,b”re not going to compromise our values, is an important message.
The Browser: ItC”b,b”s interesting that you wrote the original post, explaining why Digg would remove the links, and Rose wrote the reversal. What should I read into that? Is this another case of a founder and a CEO parting ways?
Adelson: You gotta understand that Digg is very small. Kevin and I worked to start the company. I came on officially a few months after the prototype launched. WeC”b,b”re buddies. This comes from our hearts, and in this situation, we were 100% in sync the entire time. Having been an entrepreneur who started a company and saw what youC”b,b”re describing happen in other companies, I can assure you that the environment in Digg is the exact opposite. What I love about the web community and the content community that Digg is in, is that the businesses are in the the hands of the entrepreneurs now. ThereC”b,b”s no sort of old, white-haired community that comes in and takes over anymore. The venture backing we have is so different than it was in the late 90s. Without the IPO craze, the pressures are different.
The Browser: Still, your investors must be concerned that the inmates are running the asylum. How do you give your users freedom while protecting the long-term viability of the company?
Adelson: ItC”b,b”s not a simple process. If we just put the users in charge and that was it, youC”b,b”d have chaos. Our job is to empower the users in such a way that, collectively, the community makes sense of the information out there. ThatC”b,b”s true of the technology, the user interface, the business decisions.

What’s next, we should wait and we shall see.