Custom post-type custom query – show all posts

This code:

$term = get_term_by( 'slug', get_query_var($wp_query->query_vars['taxonomy']), $wp_query->query_vars['taxonomy']); 

… just fetches the term data for the currently queried term, it’s not altering the query in any way.

To alter the query for your taxonomy term archives, you want to use the pre_get_posts action. Altering the query in the template just creates a new query, overwriting the original, as the main query for all pages happens before the template is loaded. This code would go in your theme’s functions.php or a custom plugin:

function wpa_alter_taxonomy_query( $query ) {
    if ( is_tax( 'your-taxonomy' ) && is_main_query() )
        $query->set( 'posts_per_page', -1 );
}
add_action( 'pre_get_posts', 'wpa_alter_taxonomy_query' );

just change 'your-taxonomy' to the name of your taxonomy.