I'm just amazed at this situation. I wholeheartedly agree with the other posters who think the hotel did a terrible job. Even if your card was declined, you don't send an e-mail and only give a 3 hour response period before reselling the room.
I also (like many others) wouldn't be surprised to find that the 7 lowest pre-paid reservations all had their cards bounce, and the rooms were filled at rack rate.
I don't think you'd (OP) have anything to worry about by posting the remainder fo the GM's letter to you. I can't see it as bolstering his case and since it will be most likely Starwood Corporate giving you any renumeration and then going after the hotel themselves I don't think it can hurt you either. That said, if you're not comfortable posting it now I hope you'll post it when this is all over. The GM's lack of training in Customer Service was clear even in the two sentences you did post!
Good luck!