From the perspective of the average man, I like parodies. Parodies are used to highlight an alternate point of view - often with damaging affect. In general, when someone complains that a parody is offensive, it simply makes the person complaining look bad.
The only other legal/moral argument relates to copying code. Winning that argument will make The Pirate Bay look like hypocrites. And I suspect that is the trap The Pirate Bay will fall into.
So who is the bigger hypocrite? It doesn't matter. The other side does not care about their PR image.
I think the correct response would have been to copy the other groups site right down to the CSS, and making the copy a torrent site. Then let the enemy initiate a lawsuit, and follow up with a counter lawsuit.