Meta-question: Will this termination inspire the same anti-"proprietary walled garden" rhetoric as Apple's imposition of new terms for subscription sales? If not, why not?
HOWEVER, there's still a big gotcha: that permission does NOT exempt you from the "trafficking" provisions of the DMCA. So you're not actually allowed to "manufacture" or "import" a circumvention device.
In other words, it's a catch-22, where you're allowed to do it but denied the means, because you're not allowed to make or acquire the tools to do so.
As to the question about Apple, I don't like this move: it's sort of like they don't want people to let people know all the creepy things people can learn by knowing your entire social graph. But they have no trouble using that data themselves. I solve this issue the same way I do with Apple: I have no Facebook account.
EDIT: This article is about something else, but it has a pretty good explanation of what the DMCA means by "trafficking" and why it's so crazy:
http://www.freedom-to-tinker.com/blog/blakereid/new-dmca-exe...
It's possible that a court would exempt you from trafficking if your tool only worked for an exempted work, but nobody has tested this in court, so you do that at your own risk.
Would "just jailbreak your phone" be acceptable advice to give to your mother, who is always rolled out as the beneficiary of Apple's tight control over the App Store ecosystem, if she were to want to obtain the recently banned Readability app? If not, then we shouldn't be using it as a way to sweep these discussions under the rug.
But I will also stick up for the user-centric perspective. I will never forget how Apple treated Google with respect to Google Voice. In that specific case Apple made up some very capricious arguments to avoid allowing an extremely useful app from appearing in the App Store, which would have hurt me directly had I owned an iPhone instead of an Android device.
I think that the legality of the task is important, but it's also pretty critical how supported that task is. While it's legal to jailbreak, it's also (probably? unknown) legal for Apple to accidentally brick your phone during updates.
That we can jailbreak is no consolation for, say, Grooveshark. They put in a lot of work into their iOS app and it's still only available to a relative handful of users on Cydia. It's great we have Cydia but it sucks that you have to join some elite nerd club to use it. Make no mistake, only people who are at least slightly geeky jailbreak devices. Most people cringe at the word "jailbreak" and are scared of bricking their phones. It's a very hard thing to explain to non-technical folk.
Grooveshark focuses instead on other mobile platforms. That's not good for the iOS ecosystem, it's not good for iOS users, and it's not good for Grooveshark. (I can't say that it's not good for Apple because as a result of not having Grooveshark on the store they might be retaining music sales on iTunes.)
That said, you have complete access to your own device, but you don't own the OS running on it. If you want to figure out a way to run Android or something else on it, you're absolutely within your rights to do so, but Apple isn't under any obligation, legal or otherwise, to make it easy for you.
As for Grooveshark, it's a shame for them that they're not on the App Store, but it looks like they were for a bit and then got DMCA'd for some reason. There's nothing particular about the app itself that is objectionable for the store, considering Pandora is up there just fine and it seems like they're the same kind of thing. Jailbreak+Cydia is an alternative, but again, it's not Apple's job to make it a viable one.
What would be a more positive term? "Repo" would provide a better analogy, but still has some negative connotations; "liberate" sounds far too grandiose.
I think people are letting their feelings about the App Store color everything about Apple. Ironically, the people with the strongest feelings are the people who least have to put up with it, since they understand how to get around it, whether that be jailbreaking and using Cydia for apps, using web applications, or going with Android.
Perhaps knowing how things could be makes one more upset at how they are, in any situation (not just phones).
But I think the reason the rhetoric is different is because we've all been buying downloadable apps without an app store for years. It's familiar. So it feels like Apple is adding unnecessary barriers for no other reason.
On the other hand, there is less history of service providers allowing you to use any app to access data they're holding on your behalf.
Apple's policies involve dictating the terms of outside services being used in their garden.
Facebook's policies involved dictating the terms of their own services being used in their garden.
If you have a product or service and want an additional presence on iOS it is to provide a better service to your customers and thereby increasing your value to them.
When Apple makes that hard/impossible they are decreasing your value to customers which is a problem to a lot of businesses.
The same is obviously not the case for Facebook except for a limited number of cases.