What if they, hypothetically, developed their code with a separate toolchain/IDE and didn't use xcode at all? Are they still bound by the terms of it, or is it the users compiling the app to put on their phones bound by it? I'm also pretty sure advocating people violate a license agreement isn't illegal, or did Apple get an exemption for the first amendment?

I realize f.lux was distributing a compiled binary instead of telling people to compile it from source, but I think Apple would have sent them a C&D just the same if it were just source.