What exactly *is* the conflict between the GPL and the App Store T&Cs, anyway? The FSF have a piece up that talks about the "only install app on five devices limit" but I think that's a red herring -- AFAIK you can only sync iTunes DRM content (i.e. movies and music) on five computers, but iOS apps can be installed on limitless devices attached to an iTunes account. And the company who ported VLC, Applidium, were hosting a full download of the VLC app source on their own site. I can't really see the difference between this and, say, a Netgear router firmware where the company hosts a download for the source; in both that case and the VLC app, the user gets a binary file, and can optionally grab the source and compile the binary themselves and run it (in an emulator, admittedly, in the case of the iOS app, but you're still running it. Pretty sure the GPL distribution clause doesn't have to target the exact same platform, does it?)
What am I missing, if anything? What exactly is it that blocks GPL on the App Store?