The anti-circumvention previsions may apply, even if the system was easy to circumvent. The DMCA says there is a "prohibition on circumvention of technological measures that control access to copyrighted material." It's clear that iTunes controls copyrighted material. Palm is doing something to circumvent what may be the intended behavior of iTunes. There may be an issue, valid or not.
I was at Google I/O last week, and was surprised that Palm gave an appearance on the main stage. The I was almost overwhelmed that Apple was no where to be seen. This move by Palm really seems like something that only Google would have the balls to do. I wonder if Google is perhaps behind this.