If this is the case, then how is it any different to distribution through the Android store?
The Android developer distribution agreement says (http://www.android.com/us/developer-distribution-agreement.h...):
5.4 You grant to the user a non-exclusive, worldwide, and perpetual license to
perform, display, and use the Product on the Device. If you choose, you may
include a separate end user license agreement (EULA) in your Product that
will govern the user’s rights to the Product in lieu of the previous sentence.
So it sounds like Google doesn't add any new terms to apps besides whatever the app authors themselves say, so GPL apps are fine.You can write and trade GPL software on proprietary platforms, even platforms other people may never have access to - as long as you aren't contractually restricting them from re-using the code.
The section 7.2 clause in the SDK agreement seems troubling, but it also seems unenforceable. Not only have lots of people blatantly chosen to ignore this provision (see Wordpress), it doesn't seem like it would hold up under copyright law (but I'm not a lawyer).