I've tried this myself and failed.
But I genuinely wonder, why you think this is illegal. I mean, do you think that Apple's T&C are laws? I can't think of anything else that activity would be in violation of.
I failed at it too, but then some bright spark wrote this script that works like a charm. Bear in mind that the VM might be too slow for normal use.
They better figure this out and release some good VM support because I have very little interest in buying all of their stuff just so I can run my build.
I did get the VM to work eventually and have been experimenting with builds on that. The VM is slow so I'm starting to lose interest in doing any more grunt work for an extra 10% of revenue. Ah, who am I kidding. I'll do it because I'm just as greedy as they are.
Does this matter if you never signed a contract with Apple in the first place?