The industry outrage over piracy is the same as all of the industry outrage on VCR's, DVD's, tape recorders, etc. Even if piracy hurts developers (When they say developers, they really mean publishers) it does so in a minimal way. More people pirate because they stopped regularly making demos for public consumption, because they realized if they released a demo for a mediocre to bad game people wouldn't buy it. So instead they don't release demos, and just hype a game up so even if people do realize it's bad, they still get their cash.
Regarding the whole modding questions, even if a fan makes an extensive mod for the game it's ridiculous to try to sell it. Firstly, there may be issues regarding something being sold that uses a retail and copyrighted game as its base. Secondly, I think it's against the whole spirit of the modding community as a whole. The modding community has always been groups of talented people providing quality works to the public, which encourages more people to take interest who might in turn make their own work, so you have a community that's constantly producing high quality content for free. A lot of people who make these quality mods end up getting hired at game companies anyways, so it's beneficial for them even if they don't charge. If people suddenly start deciding to charge for mods, and it becomes a popular standard, then the quality of said mods would drop because the main interest of the community then would be to make money, as opposed to making a quality product.