This New York Times Op-Ed (registration maybe required) describes how "Industrial confectioners have petitioned the Food and Drug Administration to be able to replace cocoa butter with cheaper fats and still call the resulting product 'chocolate.' The reason: the substitution would allow them to use fewer beans and to sell off the butter for cosmetics and such."
The issue is not whether it would be legal for them to make it this way... this is America — they can do what they want. The issue is whether it would be legal for them to package the fake chocolate AS chocolate (and not something like "diluted chocolate substitute — contains 10% actual chocolate") so that consumers wouldn't know the difference (before tasting it). Kids would ultimately be eating this stuff. Could Corporate America really go so far just to squeeze more out of a buck?"