Having an entire copy of the source code is really bad; you have a huge amount of power. It's really easy to distribute the code over P2P networks to other crackers and modify things such that there'd be absolutely no way of stopping cheating online, and the online play is one of the big draws of HL2. They can also make pirating the game extremely easy -- no longer would someone need to hex-edit and profile the game to figure out how to disable the anti-piracy measures.
I'm really looking forward to this game, but now its quality IS lowered, I can assure you, since someone got the code. Anyone who thinks the code link is good is a fucking moron who doesn't know the first thing about anything not involving masturbation.
By the way, this is most likely not the sole cause of the delay; the publisher announced early that the game would be delayed, which means that's what the developers told it, but Valve denied the delay because they only suspected it would be delayed, they weren't sure.