It's open source. The point of open source is that you have a lit candle and I have an unlit one. Lighting mine with yours doesn't extinguish your flame; there are now two flames.
The site will eventually offer an extended API that shows content that the official API doesn't, like downvotes and [flagged] status. It's partly why I made it, since there was no way to see flagged comments without visiting HN directly.
I spit on your fucking illicit candle, bro! I slap that candle out of your hand! “You Didn’t Build That!”
You pirated it all!
Regarding copyright, copying for display purposes non-commercially seems to be fair use. There are four factors to fair use analysis: purpose (non-commercial art project), nature of the work (short factual public comments), amount taken (individual comments in context), and market harm (none, your comment still exists on HN and YC loses nothing). Three of the four factors favor fair use, and arguably all four.
The point is, it's not as cut and dry as you're portraying it to be. If you post data publicly on the internet, you should expect it to be read. The current legal system seems to support this theory.
Since this neither violates the CFAA nor copyright, it seems ok. Publicly posted content carries an implied license for reasonable access and display. That's why you can quote HN comments in a blog post without getting sued.