Just a note - this, specifically, has nothing to do with DRM or being "online only". This was a bug in the game, the players found out it existed and exploited it to the fullest. It wasn't a hack, it wasn't a modification of any kind - just a sequence of inputs that caused the game to glitch out. I'm pretty sure it's a violation of the ToS - something in regards to intentionally abusing an exploit to gain an advantage in the game. However this would seem to be difficult to prosecute. Plus, Blizzard wasn't hurt financially by this, they made money on every tainted transaction that would have resulted from exploited farming. There are also dupe hacks and bots plaguing the system. That is where DRM is failing and it's adversely impacting the economy, and subsequently the player-base. If you ask a lot of players (or those that walked away after the last patch) this little Wizard snafu was the most fun they've had with the game... ever.
This Wizard God Mode was documented as far back as early June, but nobody knows if that's where it really started, that's just when it surfaced in a public forum (youtube). This may have existed from as far back as launch. Which would mean there could be a small, or large population out there that knew of this in secrecy for quite some time and potentially profited greatly.
Who's ready for Torchlight 2?