I think what Mike did is good,
For his work I wish him the best of luck.
The facts are:
Re-using open source cores without open sourcing your changes is simpy not legal.
If you start with an open source core and then do your own its legally normally seen as derived work - this means its open source again.
It does not matter who provides the core - if he does this or someone else.
As soon as the first FPGA image with single line of open source in it is shipped - the one shipping has to provide the sources.
Legally he put himself in a very messy situation.
Providing the sources is one way to get out of it.
If he does not want this then maybe consulting a lawrer specialized on this would be a good move.