Jailbreaking is entirely legal. And jailbroken phones allow for the installation of arbitrary software. So really, iOS Terms are not as big of a deal as you make them out to be then?
I think that the legality of the task is important, but it's also pretty critical how supported that task is. While it's legal to jailbreak, it's also (probably? unknown) legal for Apple to accidentally brick your phone during updates.
Not every device/OS combination can be easily jailbroken. Apple actively fights to keep us out of our own devices, and that has rubbed me the wrong way since I got an iPhone in the summer of 2009. I'll buy an Android or webOS phone next without question.
That we can jailbreak is no consolation for, say, Grooveshark. They put in a lot of work into their iOS app and it's still only available to a relative handful of users on Cydia. It's great we have Cydia but it sucks that you have to join some elite nerd club to use it. Make no mistake, only people who are at least slightly geeky jailbreak devices. Most people cringe at the word "jailbreak" and are scared of bricking their phones. It's a very hard thing to explain to non-technical folk.
Grooveshark focuses instead on other mobile platforms. That's not good for the iOS ecosystem, it's not good for iOS users, and it's not good for Grooveshark. (I can't say that it's not good for Apple because as a result of not having Grooveshark on the store they might be retaining music sales on iTunes.)
The terminology isn't helping, either. "Jailbreak" makes it analogous to illicitly helping convicts escape prison, not reclaiming your right to your own property.
What would be a more positive term? "Repo" would provide a better analogy, but still has some negative connotations; "liberate" sounds far too grandiose.
Why should Apple make it easy to jailbreak? That's spending development resources directly against their own interest.
That said, you have complete access to your own device, but you don't own the OS running on it. If you want to figure out a way to run Android or something else on it, you're absolutely within your rights to do so, but Apple isn't under any obligation, legal or otherwise, to make it easy for you.
As for Grooveshark, it's a shame for them that they're not on the App Store, but it looks like they were for a bit and then got DMCA'd for some reason. There's nothing particular about the app itself that is objectionable for the store, considering Pandora is up there just fine and it seems like they're the same kind of thing. Jailbreak+Cydia is an alternative, but again, it's not Apple's job to make it a viable one.
I think that the legality of the task is important, but it's also pretty critical how supported that task is. While it's legal to jailbreak, it's also (probably? unknown) legal for Apple to accidentally brick your phone during updates.