Canon won't sue their own customers. They will just refuse any liability for Magic Lantern cameras and probably won't honour warranties.
In my view the hardware isn't stressed, isn't overheating, batteries won't burnt into flames. Canon should know this - their engineers will - although maybe some of the advisors and reps will think otherwise. Software directly blow up silicon. Heat does that. Heat is a by product of software that stresses the hardware. Raw is not processor intensive. Compression is! Why do you think Blackmagic Pocket Cinema Camera can do raw with no fan in a tiny case for $999 and the Epic with compressed Red Code raw has to have a very powerful ASIC, big fans and massive heat sink?
The weight of public opinion will be heavily against Canon on PR if they do try to shut the hack down, but really the best they can do towards that end is to scare the devs with legal talk or encrypt the firmware on future DSLRs. There's a precedence here. When Canon tried to shut down Canon Rumors over legalities (trademark), public opinion was against it and they backtracked, quite wisely.
Canon should understand Magic Lantern before making a decision and make the decision for the good of their customers not for political reasons.
It makes perfect business sense to support the excellent third party software running on their cameras. Where would a Mac be without Adobe software?
Should Apple try to sue Adobe because they don't want Premiere running on a Mac? No. Crazy. So why should Canon consider doing so with Magic Lantern. It isn't a liability, it's an asset!!
