I agree that Kickstarter's text absolutely makes clear that you're making donations, not investments, and that there are no guarantees of project success even if funded, etc, etc. On the other hand, Kickstarter is in the business of getting as much money out of the process it can, and it does that by making sure that's the fine print, and that everything else is a snazzy presentation of how, for X dollars, you can get Y thing from these folks you're helping to produce Z.
Each kickstarter than fails to produce increases the perceived risk of other kickstarters, reducing overall funding. Therefore, it's in pretty much everyone's interests *except* LDs for LD to do refunds... nobody takes a financial hit, KS got to keep its cut.
Given LDs inability to communicate anywhere close to the rate he has kept promising since this project began, if he continues work, I suspect we'll keep running into "is this project dead" fears.
I think the best of all worlds would be both refunds and releasing the code, if not to the world, than to a group of developers willing to continue work on it.
Maybe by September sometime, we'll actually hear LD's plan.