The article explains it as a fork that just blindly copies the changes in the original source to avoid legal complications but not add any new technical value.
Does that mean they merge the actual code from upstream? If they do that, I wouldn't call that a fork. I'd call it a mirror. I'm not exactly sure how that provides any of the benefits the author suggests.
Do they look at the changelog of upstream and have engineers re-implement the same things only with original code? That seems like a significant waste of resources just to try to duplicate someone else's efforts.
I'd argue that what WPEngine sells (rents?) is perhaps closer to a "distro" in the Redhat/Ubuntu/Arch/whatever sense.
They use WordPress core the way Ubuntu uses the Linux kernel. They use the GPL themes/plugins the way they use all the gnu utils. They use paid/pro plugins and themes like Ubuntu uses restricted and multiverse repos. If they feel the need, they can customise the kernel/core within the restrictions and obligations of the GPL however they choose to.
And WPEngine then wrap WordPress core in a whole bunch of what they and their customers consider "value add". Easy and automated backup/restore, one click dev/staging versions of the site and the ability to promote those into production when desired, automated provisioning and renewal of ssl certs, curated plugin backlists, monitoring and affected customer notifications of security updates across 3rd party plugin/themes as well as core, platform level WordPress specific optimisation, managed OS and web server and database security patching and updates. And like RedHat, they provide a "single neck to tread on" when something goes badly wrong: a support department that's both experienced and capable of solving pretty much any WP disaster 24x7, with a platform that can quickly and easily use to provide the needed help, and a pre existing business/financial relationship so both sides of that disaster and recovery are at least partially coincident it'll be charged and paid fairly and promptly.
For every single one of our WP clients, all that value add is totally worth the price jump from $5/month on GoDaddy et al. to $25/month of WPEngine. And for us, WPEngine has a better offering for what we value than wordpress.com.
Are there any examples of people doing this and getting away with it?
There are words for what can happen if you copy source code you don't have a licence to and use it commercially, but they aren't "avoid legal complications".
Do they look at the changelog of upstream and have engineers re-implement the same things only with original code? That seems like a significant waste of resources just to try to duplicate someone else's efforts.