why though, would valve have to 'rewrite' the stolen code? Are they saying they don't have a backup and that the only version was stolen? That first article seems suspect in that respect. I know i have about a thousand versions of the code i write ...
Not rewrite in the sense that they don't still have it. Rewrite it in the sense that anything someone would write in the form of a cheat such as walk/shoot through walls, fly around like superman, blah, blah, blah wouldn't work with the released game.
They'll have to rename/rewrite API's change up code and all that happy stuff