Is it illegal?
"It claims the restriction undermines an exemption the US Register of Copyrights made to the Digital Millennium Copyright Act that specifically allows handset owners to tweak their devices so they work on competing cellular networks."
I'm by no means a legal expert. But my understanding of this is "You cannot be taken to court for breaking the DMCA if you unlock your handset".
Surely this is completely different to the proposed interpretation of "You have the God given right to modify your handset in any way you see fit. If anyone stops you from trying to do so, they are breaching your rights".
Furthermore, even if you have the right to unlock your handset, that doesn't say anything about whether Apple have to make it easy for you. You might have the right to make the change, but that doesn't take away anyone's ability to undo it.
It all seems a bit baffling to me though. Surely if you've signed up to an 18 month AT&T contract, what difference does it make if you connect it to another network? Presumably you're still tied to the AT&T contract and you're paying AT&T to use someone else's network bandwidth?