Nothing unusual in that. Fanfic is all over the web, and while use of other people's characters is a violation of copyright laws, most authors (with the notable exception of Anne Rice) are not only tollerant of fanfic, but encourage it. What better way to spread the word of your characters and your world than to have fans so enthused about it that they want to go play in your world? And then bring their friends along?
Unfortunately, Ms. Jareo stepped over the line of tollerance and into the realm of blatant copyright violation when she published the book via her own vanity press and put it up for sale on Amazon.com.
Ms Jareo, interestingly, has her own twisted idea of what copyright is. In an author interview, when asked if she had any concerns about copyright, she replied,
No, because I wrote this book for myself. This is a self-published story and is not a commercial book. Yes, it is for sale on Amazon, but only my family, friends and acquaintances know it’s there.Let's see -- how many contradictions can we count here? It's self-published -- that is, published -- but not commercial? For sale at Amazon, but not commercial? Available on Amazon, the world's largest online bookseller, but she only expects family, friends, and acquaintances to know it's there?
Perhaps Ms. Lareo has a lot of family, friends, and acquaintances. Perhaps she considers all Amazon customers to be her acquaintances.
Astonishing that Ms. Lareo, as a purported publisher, is unfamiliar with the information at this site: United States Copyright Office.