I wouldn't consider a high-profile federal legal case that could (and probably did) reflect very badly on the university to be "minutiae".
The university's general counsel and other lawyers are paid to give legal advice to the university. Why would it be so strange for MIT's president to have taken their advice?
Look, you might be right. Perhaps someone put this on Pres Hockfield's desk along with everything else and she said "We need to make an example of this kid, or the university donations will suffer." or "the university will look weak" or even "the university will look bad to the JSTOR community"
But when put next to: "Who are we going to squeeze for $100M dollars to get the latest bio building", or "How do we get more people interested in STEM at a young age?" usually that stuff is under the category of "What do I have to do to get this off my desk and never see it again?"
BTW: I agree with you that if the library gnomes (or their superiors) were the ones holding the grudge, they would not have the power to do anything, as I mentioned above.
The university's general counsel and other lawyers are paid to give legal advice to the university. Why would it be so strange for MIT's president to have taken their advice?