Well after doing only a few more minutes of research I found this:
So I would just like to say that as I expected, all three of you are not "the most knowledgable" sources of information on this topic. thank you. good day.
Many of us knew this half-witted hack has been around for a long time, and would not recommend these type of potentially destructive hacks to our worse enemies, they are certainly not posted as 'help' here or the place would be a disaster.
NOVEMBER 25, 2011 BY MIKE
Firstly note this was posted 6 to 7 months ago. Wow what a success it has been!!!
But first, a Word of Caution:
This is an experiment
And secondly, well if you bothered to read the warning label on this chunky hack well..............
Good luck, sounds like you will need it.
Good Day to you and your ridiculous attitude also.
I would just like to state to anyone else out there who may read this and want to still use textedit without it automatically overwriting your files due to whatever reason in Lion, I simply copied an old version of textedit.app from a computer running snow leopard to my local "~/Applications/" folder and set that as the default to open text files and it works perfectly. No need to copy that other folder in the link I posted.
To the thee of you who have replied to this post and demonstrated your lack of knowledge I hope you enjoy pretending to be authorities on matters your clearly do not fully understand on a forum filled with other idiots.
As you identified most people here are just trolling.
TextEdit has been ruined yes, and it will save files without asking you.
This is __bad__ because sometimes if you open something like a .pub key file, __you do not want it under any circumstances to be edited__. The way TextEdit works now is AS SOON AS YOU CHANGE THE FILE AND IDLE A FEW SECONDS, those changes are written to disk. So no, there is no way to stop TextEdit from ruining your files.
The best solution I've found is install and use TextMate 2 as the default editor. It is free an open source now.
I ran into the exact same problem as the original poster, and likewise figured there had to be a way to solve this without much fuss. And there is! In Terminal:
defaults delete com.apple.TextEdit NSDocumentSuppressTempVersionStoreWarning
After running that, you get the popup again. Enjoy.
Well there you go. This is exactly what I was looking for. A line of code that undoes the option I clicked. Just because it isnt in some fancy dialog box in the user preferences doesnt mean it can't be done, I originally posted this hoping to get a reply from someone who acutlaly knows this and the code behind OSX, not useless replies from three random idiots.
Actually you can fix this.
I just noticed in System Preferences / General, there is a checkbox "Ask to keep changes when closing documents". If you check that, TextEdit will say "SHOULD I REVERT?" when you close a changed document. The default behavior is still to overwrite, but the program will _revert_ your changes if you ask.