At this point, the Men in Black could disconnect from all other block generators, and the chain would fork.
Umm... how would they do that?
If even one machine remained connected to both the MiB and the rest of the network, then there will be no split. Transactions and blocks will continue to flow between them.
And if the MiB disconnect themselves from everybody else... then what they do has no effect on anybody else.
If the MiB have more than 50% of the block generating power then they can set the rules as you describe (refuse to put transactions with fees into the block chain, etc). If we didn't like it, we could write code that detected that they were "breaking the rules" (for example, we could reject generated blocks with no or very few free transactions, when we know there are old, free transactions waiting to go into a block), and work on our own "minority" chain. Convince the merchants and exchanges to run our code instead of the MiB code and the MiB can go play with themselves, we'll all happily continue trading with each other on the minority chain.