Hi Craig
Oh, I don't think China was the reason for the move to Mach4, not at all.
Mach3 has a (small?) number of unrepairable bugs in it. They have been squeezed to one side, but they can not be fixed. Some of them at least are in the basic design, rather than being just programming errors. Mach3 started off simple, but complexities were added along the way, violating some of Art's assumptions. A fresh start was needed, with a clean sheet design, using the understanding but not the code from Mach3.
In addition, when Mach3 was first written, the LPT port was the only way to interface to the external hardware. Yes, I think one could add a second LPT port, but the whole design was constrained by the slow speed of the processors available then. Art F did a miracle job in creating a real-time system which could over-ride Windows XP (he hacked the ring system), but the OS moved on as well. In fact, I don't think the old Mach3 LPT port driver can run under anything other than XP. Later versions of Windows have a deliberate installation check to prevent loading what Art did. There were screams, which MS ignored.
If you take out the LPT driver and use an ESS (say), then the system can work (I believe) up to W10 - but I think only in 32-bit mode. The whole transition to 64-bit machines has orphaned a lot of gear in fact, expensive gear which I still have but can no longer use. Damn it!
Anyhow, if you are going to skip the use of the LPT, then it makes sense to rewrite parts of the core to skip that driver completely. The result is that while Mach3 can only update at 10 Hz, Mach4 can go quite a bit faster (40 Hz?), and can offload some very high speed stuff to an external pulse engine as well.
As to your basic question: it would not be a lot of trouble to change the security code in Mach3 to invalidate the Chinese pirates. Of course, they would probably just buy one new license and clone that across ebay, so why bother?
Mach3 continues to work fine (within its limits), and hundreds (thousands?) of users find it quite adequate for their needs. Sure, it has some bugs, but so does every version of Windows!
Cheers
Roger