I know I may be a bit utopian in my thinking, but wouldn't giving these users a good customer experience (as Microsoft calls it) the best way to convince them that they should in fact go out and buy the software - perhaps not even now, but the next time they upgrade their systems?
No, it would more likely convince them that "hey, I got this great customer experience without even ever spending a dime, why spend money for what I can continue getting for free?" Not that I disagree (or agree for that matter) with allowing pirated users the option to use the software, I just think your logic is off.
Creepy? I'll say. Mabe even downright stupid.
Not at all. The summary clearly states that it requires 2 people that YOU appoint to confirm death before they will send the e-mail. This means these two people need to know about the service. I would suppose in most cases at least one of these two would be your intended recipient, meaning they know to expect the e-mail. Even if people receiving it weren't on your confirmation list I'm sure the site's intention is to warn those who would receive the e-mail before passing so there are no bad surprises.
You may not agree with the service (I know I certainly don't, I agree with you that a hand written message is best) but just because you don't think it's useful doesn't make it pathetic. Ultimately, if people sign up for the service it will survive, if not then it was a bad idea and it will fade away.