I didn't get a C&D letter, what I got was an E-mail from WB asking to get in contact with them, I did so and they explained the situation. There were no threats from the person I spoke to, she basically said a game free or not is too much and crossing the line of what they can allow. She didn't seem too informed on the matter, sounded more like she found the website we had tracking progress, read a little bit about the project and sent me an E-mail quick to nip it in the bud.
Nothing on paper, just verbally telling/asking us not to release a game and that we need to take down the website. She did not say so, but if not, of course they would take further action. This was an early warning before things got out of hand. I don't want to deal with any legal problems, so whatever, they ask and I comply, simple as that.
Our stuff is just getting too much attention, that's all I think prompted this to happen.