Well, first I want to say, thank goodness there was a happy ending and Pepper made it back home at all!
The problem with issuing opinions on the behavior of any of the individuals involved, is that we don't have the full story from any of them. There are always two sides to any story. (Or three or eight or eleventy-six, depending on how many people were involved! <img src="/images/graemlins/wink.gif" alt="" /> ) I don't know any of the people involved here, so I have to go by what facts were offered.
Starting with the first gentlemen that found Pepper and demanded the reward, if they saw the initial escape of the bird as irresponsible on the owners part, they may have felt justified. I don't AGREE with that, but could MAYBE understand it. On the living conditions, if they thought the bird was just there for a couple of days until the owner showed up, I can see them not investing big bucks on a cage, but was sorry to hear that poor Pepper was living in a dog crate! But, it may have been one of the huge crates that a German Shepard would be comfortable in...no one specified. On the feeding issue, they were feeding pellets, and that is much better than the bird living on pizza and beer, so it sounds like they were trying. Maybe they just didn't KNOW about feeding veggies and other healthy foods. Also, they may not have known that smoking around the bird would hurt it. It would have been nice if they had tracked down the real owner and returned the bird immediately, but I don't feel I can condemn them out of hand either. That attitude probably won't make me very popular. LOL! But those weren't the real questions you asked, were they? So...
Yes, I get micro-chips for ALL my pets. And I would still post everywhere I could think of in search of any missing pet I had, and notify all the vets and services in the area. I would also check with the locals to see if a pet had been listed as missing in action if I found one.
No, I don't want any reward for returning a pet to his real owner, and no, I would not keep the pet if the real owner offered proof that it was indeed their pet. But I would want to see proof, including some photos of them with their pet. (Pets can't talk, and being excited to see someone is not always a good indication of ownership. Pets I've never seen before in my life are usually excited to see me.) Otherwise, it may go to some scam artist who wants a free pet or wants to sell it for a profit, in which case the pet might NEVER make it back to their real home.