Textbook that is a combination of other textbooks?
A publication that compiles parts of several other publications is sometimes called an anthology, at least when it is approved by the copyright holders of the publications that were used. If this is done without the copyright holders' approval, it could be called an illegal (or unsanctioned, or pirated) anthology.
No, it is not legal or ethical unless the "compiler" has obtained the permission of the copyright holders for the works that he/she has translated and compiled.
I can't evaluate how bad it is exactly from your description, but it is illegal, and as such, at least somewhat bad. Some alternatives are to use open-access teaching materials (as Daniel Collins suggested), to use a local library, to purchase cheap used editions of textbooks A, B, and C, and to contact the copyright holders and ask for their approval for this project on a charitable basis and for limited distribution to the professor's students. 

Perhaps the first step I would suggest to this professor is to stop making rationalizations for why it is okay to violate copyright law. After this step, I suspect that several perfectly reasonable alternatives will naturally suggest themselves.