So I think the EFF's totally right in doing this. However they probably should've thought of this before they decided to accept Bitcoin donations in the first place.
From their
announcement:
We helped inform our members about this unique project through our blog and we experimented with accepting Bitcoin donations for several months in an account that was started by others.
It seems it wasn't their own idea in the first place.
Returning all of the donations is clearly impossible - some of the original private keys might be deleted or in the wrong hands by now.
While the faucet was great back then, I agree that the risk of abuse is too high, especially if it were known that a large amount went into its funding.
I personally like the idea of a trust fund for Bitcoin held by some of the developers / elders with the purpose of legal defense for Bitcoin. We could probably work out some kind of trust instrument which ensures it would only be used for purposes in the spirit of the EFF's work. It may well be that the EFF qualifies for the money some day but it shall not be held explicitly for them (due to the reasons mentioned).
Of course, Gavin would have to take the trouble to set this up but I think such a fund might come in very handy for the Bitcoin community and would probably be the closest thing to the original intentions of the donors.
I'm sure such a fund held by reputable members would receive even further donations!