However, from an ethical perspective, things get a lot murkier once you enter the territory in which:
A). You know beyond the shadow of a doubt that the item is real and works as described, and (here's the ethically relevant bit):
B). You derive significant and repeated personal benefit from using it.
Karatechop had to have known that A was true the instant after he one-shot Ignis (which was, I believe, the first in a series of both 10-man and 25-man raid boss kills that began on April 20th and ended April 25th). It was incontrovertible proof that Martin Fury was the real deal.
And B became true as of the moment that he and his guildies started getting multiple hard-mode achievements that they could not otherwise have done without the effort and time expended by other guilds worldwide to get the same result.
A + B = a big mess
There is a moral issue, albeit a somewhat less serious one, with having one-shot that first Ignis-10 fight. Would it have been better for them to try it outside of a raid? Yes, but from what Karatechop's said of the incident, it hadn't been tried at all prior to the guild's Ulduar-10 run on April 20th, and they didn't know whether it worked at all. As they quickly found out, it does, and people who were present for the "kill" thought it was extremely funny.
Did they benefit from the Ignis-10 insta-kill? Certainly -- they got the realm-first Ignis-10 Stokin' the Furnace from it -- but absent having tried the item, they had no reason to believe it was genuine. If they'd realized exactly what they had on their hands at that point, finished laughing about it, and then agreed that it was wrong for them to keep Martin Fury (much less use it) and submitted a GM ticket, I don't think anyone would have been banned or even received a suspension. GM's would've faced the nuisance of having to roll back the achievement and kill, but the raid would have satisfied its curiosity as to the intent and function of Martin Fury and demonstrated a commendable level of honesty in not wishing to "cheat" on further content with its use. From a moral perspective, I think The Marvel Family gets a pass on Ignis-10.
However, they don't have a reasonable excuse for continuing to use the item, and there's a much more uncomfortable moral issue with the fact that they proceeded to one-shot 13 additional raid bosses. I believe the nature of the content they chose to one-shot also puts to rest any argument over whether there was an incentive in continuing to use the item besides mere curiosity.
It's particularly disconcerting that they -- and by "they," I mean not only Karatechop, but the guildies who were aware of the item's existence and tacitly approved of its presence in the raid -- chose to use it on what had remained progression content in Tier 7 for them. GuildOx lists their first Malygos kill, plus A Poke in the Eye and You Don't Have An Eternity, as occurring April 21st. The guild also went on to get their guild-first Sarth-25 3D and Sarth-10 3D that same night, which rewarded them with two new titles and two mounts. They then proceeded to 8 server-first hard-mode achievements in Ulduar-25 (among them at least apparent one world-first on If Looks Could Kill).
I'm sympathetic to Karatechop's insistence that nothing apart from pure fun was intended by their intentional trivialization of raid content -- it must have been funny as hell -- but that sympathy starts to look more and more ill-placed once you add up the achievements, titles, loot, and mounts they amassed. They got more than fun out of this, and this became progressively more true with each raid boss.
Does Karatechop's intent matter here?
Yes and no. Karatechop's innocent intent concerning Martin Fury can be accepted at face value re: Ignis-10, but it becomes much harder to accept at face value with each subsequent boss kill, to the point where the guild's intent effectively became irrelevant. The guild knew that use of the shirt would continue to result in one-shots. Thus, the argument that no harm was meant or accomplished by The Marvel Family's actions starts to ring a bit hollow once you consider the extent to which they repeatedly profited from Martin Fury within a very short span of time. If their intent was only to have fun using the item on the game's most advanced content, why choose to use it on fights that were no longer cutting edge (Malygos/Sarth 3D) but were still considered "progression" content for the guild itself?
Why do previous content (Sarth-10/25 3D) that rewarded mounts and titles?
Why go to the trouble of doing both versions of the Sarth fight but ignore Malygos-10 and both forms of Naxx?
And -- most interestingly -- why haul the shirt out for 25-man content in Ulduar only after the guild wiped several times on the Flame Leviathan encounter?
I believe Karatechop when he says that the guild had a lot of fun doing this -- it would be almost impossible not to have fun one-shotting the most dangerous content in the game -- but having fun isn't incompatible with having profited from the item to a morally questionable degree. Nor is it incompatible with having screwed everyone else on Veknilash out of a shot at legitimate server-firsts, and had the capacity to screw the rest of the world out of firsts as well. The shirt enabled them to do things that world-first competitive raiding guilds can't presently do, and it's entirely possible that The Marvel Family could even have achieved a world-first Algalon kill if they'd kept going and had the sense not to advertise what they were doing in trade chat. The limiting factor was solely that the guild got caught before raiding beyond Auriaya, not that they coudn't do it.