Thats a nice story. But it misses the point: what if an equally good painter sat next to picasso, came up with a similar painting in another 5 minutes and gave it to the woman for free (maybe hes angered by picasso and love free art), how would picasso react? We don't know.
But what if the other painter, seeing Picasso's painting, painted another, not based off of the woman, but based off of Picasso's painting? Would that be considered theft?
It would be considered theft if the other painter hopped over to picasso, took the origial picture and handed it to the woman. To add some spice to the scene, maybe he hits picasso in the process, which would add assault. But, as many others have pointed out: copyright violations are not theft.
But as the story is not about copyright, but about perceived entitlement, its also completely irrelevant.