Some comments:

> If they want the source from the LUG, they should contact us about
> prices.

This is acceptable, but GPL 3b requires that you provide a *written*
promise to that effect.  IMHO it only needs to be sufficiently legal
to be a binding contract - i.e. dated and authenticatable.  How you
acheive that is up your lawyer ;-) And (this is the fun part) it needs
to be effective for three years, so keep a copy of that source cd, as
you must ship the exact corresponding sources, not some random newer
version.

> We therefore charge a hefty price to deliver the source in CD form.

"Charge" is OK, "hefty" is not.

> This not only covers our time and production costs,

The GPL allows this.

> but also encourages the members to go to the primary repository
> (cygwin.com) for the sources.

The GPL forbids this.  It allows *actual* costs, but no more.  But be
fair to yourself - figure out media costs, hours spent, shipping,
overhead, etc.  The GPL doesn't want you to suffer from this, but
neither can the recipient suffer.

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