Didn't Sir Terry start out writing fanfic himself? He was a huge fan of Arthur C Clarke I think and that got him heavily into sci-fi when he was young. I don't think he is against fanfic, just certain 'forms' and even if he was it'd still get written.
It takes all sorts as we know and adults will be adults
I don't 'do' Discworld fanfic at all (I would never be as good as Terry so I just enjoy reading him) but I do LotR adult as the dear ole Prof left a ton of holes in the 'back history' aka The Silmarillion
and more truthfully as Unfinished Tales
and so they almost demand 'filling'. Slash isn't everyone's cup of Darjeeling (if you don't know the definition it's Vimes with Vetinari and almost without question about consenting adults, which is of course legal in most cultures now...) but if you skim the 'offensive' parts its actually quite beautiful even tender, reason possibly being that the form is mostly written by women oddly...
One of my regular writing partners (strictly hetero for me) does slash really well and once you get over the 'Ewww' factor it's really intriguing to write on the underlying nuance of friendships such as Aragorn and Legolas and I really love one story they did about teaching a 15 year old Aragorn how to use a bow like an Elf - not a whiff of full on eroticism, but full of loving care and empathy.
In contrast my current fanfic passion has recently had to be booted into the adult sector of the new site because I'm 'exploring' how Morgoth and Sauron 'made' orcs and whilst I previously just about got away with infanticide and marital rape and murder, turning my heroine into a serial baby (orc) killer and corpse abuser went a little too far over the traces
As a piece of writing it wasn't 'Kill Bill' graphic, nor too gratuitous and fully justifiable within the storyline. So what's sicker huh? A loving same sex relationship or all out horror and genetic perversion?
2nd thought edit ~ Just to be 'clear' the corpse abuse had nothing whatsoever to do with necrophilia but a lot to do with vengeance, anger and abandonment.