I did some investigating into the entire processs, and determined that a properly made patch, should work around to ~400-500MB, if it had properly done the following things.
Code:
Extracted ISO 1
Patched "PSP_GAME\SYSDIR\EBOOT.BIN"
Patched "PSP_GAME\ICON0.PNG"
Patched "PSP_GAME\PARAM.SF0"
Extracted contents of "PSP_GAME\USRDIR\yellow.pkg" to a temp working space.
Extracted ISO 2
Extracted contents of "PSP_GAME\USRDIR\yellow.pkg" to temp working space 2.
Merge contents of Temp working space 1, and Temp working space 2.
Apply a patch to the merged temp working space.
Repack temp working space into ISO 1 "PSP_GAME\USRDIR\yellow.pkg" (which will also at the same time update "PSP_GAME\USRDIR\yellow.fsd"
Build final translated UMD iso.
Honestly, I don't think Sky put much thought into the "patcher" itself and just whipped together something that does a few checks to "confirm" you have the game.. How much work did he actually contribute to this project? A novice programmer would have been able to easily replicate that "patcher" fairly easily.
He probably opted to rush something that "worked" together as the patcher for public release probably wasn't intended to be rushed out as fast; sky makes himself come off as an egomaniac attention whore. He also broke the widely accepted unspoken rule of scrapping a translation project of any type when a publisher decides to put out an official release; I feel that SE would have allowed a release after a certain allotted amount of time after the release of their localization, whether it be HD or not.
I just hope that if SE decides to take legal action, they'll go after sky for releasing it and not the whole team, as it seems the people actually translating it were against the release and essentially sided with SE.
I understand SE's position, and it'd be a completely different matter if they weren't going to release it themselves in some form, irregardless of the fact it'll be done for "next-gen" consoles. Returning to my belief that they'd allow the release after they've made their money, which is understandable, it's probably because they'd also want it to be playable in English on the platform it was intended for, which makes sense since it'd help various demographics apart of that fanbase to stay happy, and make sense from a business perspective.
Not to mention, it would have satisfied both parties, and allowed for the game to be accessible on various platforms. It'll still probably come out on "next-gen" platforms, but thanks to sky's reckless actions, he's essentially put the team in danger of legal action just because he more than likely wanted praise as someone who "stuck it to the man."
He handed the matter in an extremely unprofessional and immature manner and has burnt the bridges with everyone who may have possibly considered working with him on any future projects. Not to mention, this could also have negative effects, besides the probable lost sales, on people wanting to translate other games in the future as the possibility of legal repercussions wouldn't make a project like that worth it. I'm sure games and other various forms of media will still be translated in time, but this could put people off of doing something that they may have eventually done.
Thankfully the franchise in question is Final Fantasy, if it were from a franchise with a considerably smaller fanbase, it could be deemed as counter-intuitive from a business standpoint.