An excellent question, Levi.
The CC license for "Embracing-the-New" says "you may reproduce this for free if you are doing so for a non-commercial purpose; if, however, you are making money off of it, you have to give me some (or at least get my permission)."
It doesn't say "Embracing-the-New" can't be distributed commercially. Fictionwise is distributing it commercially; their usage does not fall under the terms of the CC license; hence, they have to make a separate deal with me, which they did.
They can't rescind rights that I have granted. Anyone is free to distribute "Embracing-the-New". If they want to read it on a PDA, or if they value the collaborative filtering part of the Fictionwise site (e.g. they never heard of me but find the story through ratings or Fictionwise promotions), it may be worth it to them to pay FW money to get a FW copy of the story. That has no bearing, though, on their right to redistribute the story noncommercially, with attribution.