more information on Harald Welte's blog: http://laforge.gnumonks.org/weblog/2011/06/20/#20110620-avm_...
If AVM is trying to stop Cybits from running modified versions of the GPL code on AVM hardware, then it's not really illegal directly for Cybits to do, but AVM could enforce code signing DRM requirements in their hardware (like TIVO does) to prevent anyone with fiddling with it.
Really AVM could just give up warranty and support for customers that change their software to run Cybits, or if it really bothers them, put signing requirements in their firmware.
No. The GPL (v2 here, the kernel will very likely never go v3 because Linus does not want to re-licence his contributions) grants you an irrevocable licence as long as you do not fall out of compliance with the terms. If AVM wins the courts would be affirming that they have not breached the terms.
It would also be up to said copyright holder to not only challenge AVM in court, but figure out how to do it without invalidating the GPL if they win.
Is there any more to this than the quote above? The GPL is viral. Sure, you own the copyright to any changes you've made to GPL'd software, but you give up a lot of those rights the moment you distribute. Don't like it? Look for something BSD/MIT licensed to modify and distribute.
Copying and distributing that derivative work is restricted, however.
I always thought that fan fiction lived in a legal gray area that was tolerated by some and not others. So in my opinion, it's a bad example to use in this case. GPL is very explicit as to your rights and responsibilities.
Consider what would happen in your FanFic case if Sony tried to incorporate the kid's changes into EverQuest. The kid could sue them for infringement.