Why did they not like the idea of a donation button?

I don't know.

Probably pressure from the greeddy Bethesda.

Kind of AMA by Gabe Newell:

http://www.reddit.com/r/gaming/comments/33uplp/mods_and_steam/

Holy smokes, all his answers are downvoted to hell.

Here's what he said:

https://reddit.com/r/gaming/comments/33uplp/mods_and_steam/?sort=qa

Good news: they are removing the paid mods!

Yeay for intern community acting together!

See petition on Change.org with 133 000 signatures!

https://www.change.org/p/valve-remove-the-paid-content-of-the-steam-workshop

And yeay to Valve and Bethesda for listening to us!

(But we will be more vigilant now.)

http://pandawhale.com/post/62236/the-gaming-community-won-this-battle-paid-mods-are-being-removed-bethesda-blog-steam-community

Wonderful! Shows that the users really do have some say. 

Yeah, and some users have a lot to say!

It's actually great to see such a passionate community.

The community saved Steam from a huge mistake.