I'm not sure I understand why the admins got so upset about it. If, in fact, Wikimedia Commons was hosting illegal images, why shouldn't the foundation take actions to ensure they were removed?
No, these images are not illegal.
IANAL - but I am one better, someone who grades such images for court.
[on the issue raised; clearly the foundation does have a right/obligation to remove illegal images. Indeed even if they suspect them to be illegal. However any expert they could have found would have told them they are fine. I think the uprising is more against the impression that the foundation has bowed to their sponsors rather than take a realist/rational approach]
Although I must confess that at this stage, the thought of Jimmy Wales commanding a billion dollar empire does not necessarily excite me.