Yeah, I have no idea how to feel about this.
Does it make sense for race to matter when it comes to getting published? Ideally not, but, well, racism exists. You can't actually get race-neutral results without blinding of some sort, as UP suggests. I can totally see people thinking "I probably have some unconscious bias against non-white authors, so I should try to make an explicit effort to include them more" and overcompensating.
In that sense, did Michael Derrick Hudson somehow steal an opportunity from Asian authors? Well, maybe, but if anything the whole thing suggests there's no shortage of opportunities for Asian authors. His case could have been a fluke, but assuming it's not, there's nothing being stolen here.
Did he sour people on trusting anyone with an Asian name? Again, maybe, but probably not. People might be more careful checking that authors are who they claim to be, but that's not gonna hurt actual Asian authors.
Did he "appropriate" Asian names? I don't know, I don't understand cultural appropriation as a thing. I mean, in the broad sense it means people from one culture doing things associated with another culture, but that's not an inherently bad thing*.
Did he do "yellowface", as one blog put it? I mean, it's not like he dressed up as a Chinese stereotype for the purposes of parody. He just faked being Asian. It's not obvious to me why that's bad.
Did he offend people who suffered mockery and discrimination for having Asian names? Yes, definitely, and it's totally understandable for them to be bothered by it. But, well, people have lots of different personal experiences that mean that for anything you do someone has an understandable reason to be bothered by it. It's not Hudson's fault that other people were assholes (as far as I know, anyway, it's possible he was an asshole himself against someone over their name).
Was it unwise to do it? Almost certainly. Anyone paying the slightest bit of attention to the general discourse on race would have predicted this would blow up in his face when he was found out. But that doesn't justify a witch-hunt.
TL;DR: Everything is a giant mess when it comes to race.
*at least I hope not, given that I'm doing that right now by writing in English.
