Yes, obstructionism is just as much a part of democracy as passing legislation, there's no part of democracy that says legislatures have to pass anything presented to them

Are they really holding him hostage by taking him to task for an illegal order?

What are you talking about. The constitutional system we have is that legislatures are Sovereigns and Executives are Heads of State. I don't care if the Wisconsin legislature is led by one party or another -- it has powers and prerogatives that it has to be jealous of. The governor is not being held hostage, rather, the legislature has to be consulted and may not be ignored.