Public law 112-95 and the Special Rule for model aircraft does not have any altitude restriction, the AMA Safety code does not have an altitude restriction, AC91-57 does mention 400ft, but it is a guideline, not a must.
Ultimately the FAA does not have a law prohibiting model airplanes from anything. AC91-57 suggests some operating parameters that are good to follow, but this is far from anything enforceable. Stay within the AC's guidelines and they won't even look at you. Go outside of them and you have to take reasonable steps to ensure the safety of your operation. Glider guys do it all them. So do rocket guys. The AC is just advisory.
For now they are stuck to looking the other way, simply because they do not have the legal authority to prevent it given (among other things) the special rule for model aircraft. The most they can do is invoke air safety to prosecute an FPV flyer (and in that area they do have some authority) . Good luck with that in 99.99 % of cases where we are talking foamies, small drones, etc ... at low altitude and at AMA open fields.
As you probably know the only time ever when the FAA invoked its authority on model aircraft is in Huerta v. Pirker, with their only argument centered on safety. And in that case a federal judge sided with Pirker and against them. They then appealed to the NTSB, who sided with the FAA essentially stating that anything that flies, including say your 100g nano copter two feet off the ground in your backyard, is an aircraft in the national airspace and as such subject to FAA regulations. The case ended when the FAA and Pirker agreed to settle, with the FAA ok with Pirker recognizing no guilt whatsoever and a 90% fine reduction. In my opinion the FAA avoided some serious future embarrassment with that settlement, and Pirker showed the FAA had no case. But others have interpreted it as an FAA win.
The best victory would be for everyone to just use common sense. I for one would like to continue recreational flying.