I believe they locked it because it was beginning to make people angry (posts with death threats at Square Enix, ect).
Actually, if you go through old threads, you'll see that they have a history of locking any threads that don't agree with their own personal view on a particular subject. There are probably more than 100 threads that are locked, with the final post being one staff member or the other spouting off about why the original poster (or someone else in the thread) is wrong, and then locking the thread so that nobody can rebut the staff claims.
Of course, this is completely off topic. Regarding Crimson Echoes, I don't think anyone calling Square-Enix is going to be able to determine anything. If SE *didn't* send a C&D, they might still claim to have done so as a simple way of shutting down a copyright infringing project. I mean, think about it, if you ran a ROM site and got a C&D allegedly from Nintendo telling you to take it down, and then you called them to find out if they really did send one, they'd be pretty stupid to say no, because that would either encourage you to continue running the site or else would require them to then go out and send a real C&D in order to shut the site down.
On the other hand, if SE really did send out a C&D, they might lie to any uninvolved third parties that contact them in regards to the legitimacy of the C&D so as to prevent any ill will. It seems odd to me, however, that they would issue a C&D in regards to Crimson Echoes but not Prophet's Guile which was another hack (not as extensive, from what I've read) by the same people.
What a lot of people tend to forget is how exactly copyright law works. Even though Crimson Echoes wouldn't be sold for profit, even though you could potentially make a case that it could boost sales to Chrono Trigger DS (for the sake of argument), Square Enix is still legally obligated to protect their copyright. If they allow Crimson Echoes to go forward, they really have no legal basis for shutting down the next similar project, and after a few such projects, someone might decide to sell a Chrono Trigger hack for profit and, if SE attempted to sue them for doing so, a judge could very well look at all of the hacks that SE allowed to disseminate and rule that they had failed to protect their copyright and no longer possessed it.