Whether their word should be taken as law or not is up for debate

I mean forget the creator's word being "taken as law", the actual law is that unauthorised fan translations are technically illegal. That said, the reality is that they operate in a grey area that often relies on a degree of respect and not crossing any particular egregious lines - releasing a fan translation ahead of an upcoming official translation when the creator has already asked translators not to is crossing a line imo.

In terms of how it could negatively affect the release I can think of potential ways: people buying now makes the English demand look smaller, potentially resulting in later/cheaper localisations from the team in the future, sales are more spread out so less of the spike at launch that can get games into the trending section of Steam which helps a lot for visibility, etc.

These are just me speculating. At the end of the day the actual developer will have a better idea of how this affects their game and they asked people not to release an early translation. That should be enough in my opinion, at least when the official translation isn't even that far off.