Nuke,
Honestly I'm reserving my opinion because I don't have all the facts and haven't done any research. I was skeptical about the story before you first posted, and I'm skeptical now.
On the other hand, I know that for a great number of people, the internet itself is one big fantasy game where they can play out roles that they can't reach in reality. Some of those roles are "honorable", using our AH scenario designers and commanders as examples, and some of those roles are sick, using guys who pretend to be girls as examples. In either case however, it's playing a role and while I find the sick ones to be distasteful, the mere fact that someone is playing a role has not shocked me since I logged into my first BBS 20 years ago using a 300 baud modem and a commodore 64.
Sick? Maybe. Sad? Definately, but I also consider "normal" players who are addicted to AH to be a touch sad too. I'm willing to call a liar a liar if I can prove it, but I try to be very very careful about challenging people's online persona. Part of that is because I have never used an online persona that is any different than who I am. When I log on, regardless of my ident, I present myself as who I am, and I thank HTC for maintaining the privacy of their clients who choose to use "shades" accounts. I do not pose as anything but who and what I am, even if I'm being "not eagl" (boring).
So for me to challenge someone online over a matter of their persona is a pretty big deal to me. It took quite a bit of time before I got publically involved in the whole Voss thing because I knew how I'd feel if I had some real life problems and people gave me a hard time about it. I'm usually non-confrontational by nature (hard to believe sometimes but it's the truth) so I lean towards the cautious side when confronting people over a lie. I guess that makes the opposite approach even more repulsive to me just on general principle. I simply don't go up to funerals and demand that they lift the coffin lid, because it's rude and even if the coffin is empty, it's still the wrong thing to do. There are better times and methods for that sort of thing.
For a slightly more direct answer to your question, "Yes", I find fradulent presentations involving the military and hardships/death to be repulsive. They need to be exposed so nobody else gets hurt or deceived. However in this case I have no proof either way, and I was taught that in the absence of proof the right thing to do is to either find a polite way to investigate and bring out the truth if it's really that important, or to shut up and give them the benefit of the doubt if it's not that important.
Buyer beware is a pretty good assessment of the state of the intardnet right now, and giving money or personal information out on the web without some sort of hard proof is a foolish but usually non-fatal error to make. Risking the possibility of challenging someone who is going through a genuine tragedy is a big deal when the alternative is, as in this case, a reasonably harmless charade.
But really that's just my opinion. Everyone has their own way of reacting to such things and I know that in the past I've been less forgiving of such charades. The internet used to be more "real" to me because I was a comp sci geek and never was comfortable doing the role-play thing online except within the framework of an actual game. I had a great usenet flamewar with DoK Gonzo over this around 8 years ago, and looking back on it we were both right considering that to me the internet was "reality", and I think that to DoK the internet (forums, bbs, whatever) was just an extension of "the game".
Some people get really wrapped up looking at the intardnet from their own perspective. I still view the internet as "real" in the same way that those old D&D games were never much more than a bunch of dice and rules to me. It's completely different to a lot of other people and while I may not like what people do, say, or present on the intardnet, I try to understand that to some people it's all part of their game, an escape from reality.
What a damned wishy washy reply, but really I don't know all the facts in this case so I'm not going to condemn anyone's story in here without being certain.