Blizzard, by removing LAN, now exerts total control over tournaments. KeSPA can live with paying royalties for SCII, but the thing they protest the most is the control it gives Blizzard over SCII as an e-sport, something that Blizzard did nothing to help create besides making the game. KeSPA (with it's members being the sponsor companies for Starcraft Broodwar in South Korea) resents that after their hard work building up the e-sport over a decade, Blizzard wants to come in and boss them around even though they didn't do a thing to help them initially.
I can see why, but in the end KeSPA will cave in. SCII will replace Broodwar eventually, and KeSPA will need SCII to keep the e-sport alive. Realistically speaking, only South Korea can viable create an SCII e-sports scene, so fans should be hoping that they come to an agreement or it will be the end of e-sports. Blizzard doesn't really care that much about e-sports, they never have, because even if they did make money from it, it wouldn't be very much. They just want to sell games, they don't care if people keep playing those games once they've got the money. They figure the community will do a bunch of small tournaments that will keep interest in the game alive almost as well as an e-sports scene would, and they're probably right.
It's just sad, because if Blizzard doesn't make a serious South Korean deal soon, e-sports will be over. Starcraft has been the only truly successful and legitimate e-sport in the world, and not continuing it with SCII would probably mean the end of the concept of e-sports for at least a decade. We'll be stuck with MLG Halo best headshots of the week for the foreseeable future.
