The 1988 agreement being in effect or not being in effect is irrelevant to this discussion. They have nothing to do with Star Control: Origins. They have no rights to it.
Frankly, I think it’s pretty gross to see Paul and Fred’s fans spinning their awful behavior into unrelated arguments. If they they had any ethical or moral compass whatsoever they would acknowledge that DMCAing Origins on Steam for the reasons they publicly stated was despicable.
If you are rooting for a result that would, in effect, allow game designers to own IDEAS then you’re, at best, a fool.
There obviously has to exist some middle ground, though. You would, surely, be upset if I started selling copies of Galactic Civilizations, but you'd also be upset if I did an open-source remake called Galactic Civility that was exactly identical except for using slightly different races (Terran Alliance, Yer, Drengi, Alteran, Droth, etc.)
No one is claiming you can copyright "the color red" or "the concept of hyperspace". What has been said is that you can copyright "a particular expression of hyperspace which is a red space filled with swirling lights and holes that allow you to see in to nearby star systems." The industry doesn't suffer just because the next person to come along needs to make their hyperspace green with strange cubic shapes instead. Indeed, for 25 years, the industry has been finding new expressions and avoiding stepping on toes.
Hyperspace is also just one example of infringement. SC:O advertised the inclusion of copyrighted characters from the original P&F games (the Arilou, Chenjesu, and Melnorme), and used art from the original games in it's marketing materials.
This isn't a situation that presents any sort of "chilling effect" on the industry at large - just on companies that try to tow the line by copying both visual appearance, and repeatedly advertise potentially infringing content.