It's certainly better than "you can't look at the source code."

I encourage the developer to not call it open source and use other terms such as "source available" or say the the source is public, etc. Open Source is an ecosystem that this project admits it does not support (meaning, open source projects is not what this aims to be "compatible" with) or is a part of. When projects misuse the term "open source," it can dilute the meaning and value of the open source model and ecosystem, making it harder for users and developers to understand and trust open source initiatives.