People will go to jail for this. And a personal call from steve jobs was enough - no letter is required. They had already published that it was apple's phone, so they knew it belonged to apple. Demanding something in exchange for returning property is extortion.
I'm a little surprised that you missed this, considering your background. The letter was nothing, he simply asked for legal proof in writing. Isn't that heart and soul of the system? (ok, maybe he sounded like an ass when he did it, hardly a felony)
What he extorted was the demands for better access to Apple secrets because he is a "journalist". It basically read like, "give me $2mil in small bills in a paper bag, and you can have your phone back."
For maybe the first time, I am in complete agreement with SJ. Journalism is the biggest source of privacy infringement in the history of humans. Kill it.