My bet is that Valve doesn't like it when you reproduce their games using the same name, since both this and TF2 source 2 got hit, but we also got an original portal mod on steam last week, and Black Mesa is a monetized remake of HL1 that exists on steam.
Hell there are dozens of mods and expansions available directly on steam with their own store page instead of workshop.
Legal teams. Not there to be cool, there to shut things down. Chances are that team bypassed the folks that make the cool decisions. So there is a chance this could be changed when the right person catches wind.
This wouldn't be the first time. I have dim memories of this sort of thing happening before. Just not quite sure on the details.
That’s not the only problem, I think. It’s not an adaptation of their work, it’s a “demake” which means it uses original source files or, at best, exact recreations of that work. The other projects people are comparing this to adapted Valve’s work to make something original. This isn’t original and uses the existing name. It would be very easy for Valve to make the claim that this product could be confused as an official Valve product even if most people who are interested would know the difference or be able to tell.
Black Mesa also had to change its name one time iirc. It was originally being developed as Black Mesa: Source, and Valve told them to drop the "Source" part.
Watching Black Mesa development was really neat, because it kept getting delayed, then they stopped updating fans while insisting it was still in development, and we'd all pretty much decided it was never getting finished.
Then it came finally came out and was so good Valve let them license and sell it.
Valve has stated that they are okay with people making mods using their property, as long as they either openly state that they are not Valve, and do not use Valves IP in their names unless they ask for permission by Valve, which they will give in many cases. They are more strict when it comes to commercial games using their IP, of course. I think in the case of Portal 64 though, it definitely has to do with Nintendo's ridiculously over the top protection of their copyrights.
Black Mesa was also limited by valve in some minor ways
I remember being at PAX East in 2019 before COVID, and they had a booth there. They had big box copies of Black Mesa which I thought was really cool, I wanted to buy one just to have on display. But they said valve actually said they weren't allowed to sell them. It was only for a promotional purposes at the booth.