"Erasing the PID and VID makes the device non-functional"
The VID and PID claim the device is a specific FTDI product. FTDI drivers detected that it wasn't an FTDI product at all and corrected the invalid PID so the device would not incorrectly request FTDI drivers to be loaded again. The FTDI drivers are only licensed for use on genuine FTDI products.
Under windows the device never was functional because there are no legitimate drivers for it, Yes there is a small lame argument that plugging your fake device claiming to be something it is not into a Windows box will result in it subsequently not working with open drivers on a Linux box.
"I'm hoping that Microsoft comes out with a strong statement and matching sanctions. They've made a big deal of WHQL certification, extensive testing and driver signing. This was either a failure of their process, or a demonstration that driver qualification nothing but business leverage."
Just lol - FTDI submit their drivers and hardware for testing and pay for it. Do you really think they should also be responsible for testing all the fakes and clones because they have FTDI stamped on them or use a VID allocated to FTDI by the USB-IF?
FTDI have no problem with competitors - they have a problem with products pretending to be manufactured by FTDI which abuse and tarnish their good reputation and use their drivers without license.