I'm a little late in replying seeing as I brought it up, but yes, my issue is the double-standard at play. If you think that someone is such an awful human that his corpse should be dug up and paraded through the streets before being strung up as a pinata for black children, you should not be engaging in a financial endeavor based off of that person's work. Nobody remotely sane could ever say that Lovecraft was not racist; you can get into the weeds about how racist compared to general 1920s people, or how his mental illnesses directly led to the work he produced, but dude was all about some racism, so if you're inclined to sob about it while flagellating yourself in a horse hair shirt, maybe write your game about someone else's stuff.
You say (as bolded above) that no one remotely sane would say Lovecraft was not racist, but over the years, I've encountered lots of people who said exactly that. They declared they didn't see anything racist in his stories. In my experience, it's only in the last ten years or so that his racism has been widely acknowledged. Even now, in this thread, by saying he was racist, I've had various accusations like imposing my political views on my son.
I stand by my original assertion. It is not a double standard to (a) say that Lovecraft was racist, and (b) appreciate the quality of his writing - including developing based on it, and making money based on that development. I don't make money off it, but I've played and run plenty of Call of Cthulhu games while holding these opinions.
No, Lovecraft was a racist, and as usual you pulled that out of your ass while ignoring the point everyone here is making: It's hypocritical to make money off a guy you hate. And yes, as Bruwulf said, you think it's OK for everybody to make money off of a creator's ideas except the creator himself, if you personally deem the creator a bad person.
If I was an Orwell scholar and wanted to publish some newly edited/annotated/ whatever work of his, I might address his socialism somewhere in it (entirely appropriate) but I sure wouldn't preface the book with my personal manifesto about how much I hate socialism and socialists and go on a tirade against the guy.
You might not like it, but it's not hypocritical. If someone holds the position "you can't make money off a person you hate" for others, but then makes money off someone they hate - that is hypocrisy. But it's possible to consistently say that making money off someone doesn't require liking the person.
For example, someone might be fine making money off the WotC's SRD even though they hate Wizards of the Coast. I'm fine with that. You don't have to like or approve WotC in order to make money off their IP.