If someone cares about your characters or world enough to go to the effort of writing a fanfic, I'd say you achieved your goal as a writer! You've engaged those readers--and very strongly. Isn't that what you hoped to achieve?

It very well may not be at all what the writer wished to achieve. I know many writers who write because they want to make the characters in their head become real -- or, at least, as real as they can be while still being fictional. Fanfiction undermines that, to some extent, when one is reading it; the reality of the original author's character is being supplanted and replaced (if only for a little while) by the reality of the fanfiction author's warped version of the character.

I do agree that fanfiction is almost certainly a financial and popularity boon to the author. What I don't agree with is arguments that amount to presuming what the author's goals are and then saying that they have no standing to complain about things that support those presumed goals. The author, like any other person, has a right to their own desires, even if we think they're wrongheaded. The legitimacy of doing things counter to those goals (which, for Ms. Hobb, writing fanfic about her works clearly is) can certainly be defensible, but not on a basis of "It's what you ought to want."