You don't always have to be a "powerhouse" to be a player. Czyz has that electic TT bike setting world records. Roehr is building bikes that, albeit expensive, apparently aren't so expensive as to not be profitable if made by the small team he's assembled. Fischer needs marketing. I'd bet that the little bike will hold it's own against like bikes from Asia. He's selling them for less than $9k, too.
Point is, Erik's name is his marketing. If he joins forces with another running company instant cred it delivered. Kind of like Tamborini bounching from Bimota to Ducati to MV. No matter where he goes money flows with him. People want in. Even if the company isn't making large profits. If Erik joined one of these guys instant financing would be freed up by someone ready to take a shot.
As for the non-compete. Designers come and go in motorcycle and auto industries. I'd bet that there is a contract, but no non-compete. Erik's only bound by a non-disclosure of proprietary information.
I read an article by Kenn Stamp that made since. His belief is that HD screwed the pooch on Marketing the company. They should have let Buell hold it's own as a company instead of being tied to HD dealers. Those "Sportbike" shops that exsist around the country like Corse Superbikes should have been the dealer network rather than HD shops and their less than enthusiastic sales people.
The "real motor" argument is fair, but I think that the majority of the problem was marketing. Buell makes a great streetbike, but everyone wanted to compare it to bikes that were clearly not in the same category of bike. You can't directly compare a bike built with track intentions (the 1098R) to a bike that even Buell calls a streetbike. So, Buell was left in this weird middle ground of "how do you market it" and things blew apart from there. Jouros wanted to compare the bikes to hardcore sportbikes and usually Buell came out the loser. Erik should have adapted earlier to that or stuck to his guns by continuing the "it's just a great streetbike" idea. He flexed thinking you can compare the bikes to modern track style bikes. His DUH! button was stuck on that call. But the question is, "Was Buell bleeding money or where they just the easiest way to control cost and keep the unions happy?"