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Why can't VLC change their license to something that works with Apple's App Store license agreement. Clearly the VLC developers wanted Apple to distribute their Application because why was it otherwise created and put up on the App Store in the first place?

</devils advocate>

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In theory, they could. I suspect that, practically, that's not going to be possible. I don't know all the details, but I imagine it'd mean going to every contributor and getting some kind of statement that they are allowing their code to be relicensed under a new license. That'd be pretty nasty. I believe Squeak Smalltalk went through something like this and it took years.

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