Thanks for the response(s). So what happens when the aircraft gets
sold and there's a new owner. Is the installation grandfathered?

The same answer as to what happens when an aircraft is sold with an STC'd
part on it. Does the new owner have to go to the STC holder and apply for a
new STC? No, once the part is installed as approved, who owns the airplane
from that point on is immaterial. The approval goes with the PART, not the
owner.

What
would have prevented this guy from just saying, "I" built it and "I"
obviously did a good job as it's worked perfectly for x number of years.

He made the cardinal mistake when dealing with the FAA...he told the truth.

As to those who say that parts can be made by taking your design down and
having it built by the local machine shop, you are correct. However, YOU
had a hand in making the design and convincing your mechanic/IA that the
part would be airworthy as-built. However, in this case, the feller took MY
design down and asked another person to build it. That makes the feller
just a conduit from me to the actual manufacturer. I'd have a hard time
looking the Feds in the eye and saying that "I" built it under this
scenario.

Jim