I’m sure the argument is that Napster- and Grokster-style contributory infringement is infringement. I have a hard time imagining source code enticing people to infringe copyright, but if the program encourages infringement, I suppose the repository is a logical target.

I won’t predict whether the contributory infringement argument will win. I’m sure the law was written with direct infringement in mind, but I don’t think that rules out creative interpretations by itself.

I believe the clearest approach would be for the MPA to not bother with a DMCA notice, and just sue the project directly. But if you can get what you want on the cheap, why not try? And I’m not sure a lawsuit against the project would do much good: even assuming the MPA were to get an injunction, they’d need to play whack-a-mole to track down anybody using the PopCornTime code.