I love the high and mighty responses. "Oh your a cheater you shouldn't have used it!".

He was send an item in the mail from blizzard. If you looted Martin Thunder from Yogg Saron, would it be legit then? What about an Elwyn Bunny. With the multitude of joke items and whatnot it is obvious that there are times in which Blizzard has a sense of humor in game.
What is several toons gone for several months worth?

Would I have used the item?
No, because I know that in its soul, blizzard is a soulless company, and it would consider it cheating and ban me and anyone near me.

Was he breaking the EULA?
No, he was using an item sent to him by a GM for the intended affect the item said.

Did he think what he was doing was wrong?
I don't know, you don't know, only he does.

Who was at fault?
Blizzard, specifically the GM for giving out the item, but as a company you are responsible for accidents your employees commit because of lack of safeguards.
Karatechop, for acting recklessly with an item that at bare minimum should have been worth asking a GM about.

Double at fault? In auto world it means you split the bill and go your separate ways. In Blizzard's world it means they ban the person who made them look bad (and a multitude of others who might not have even known what was happening). And people say karatechop is the one corrupted by absolute power.