Which didn’t scale because it doesn’t scale because the blue box stopped working. Sort of like Beeper.

What’s your basis for saying that? Honestly asking. Seems like Beeper’s true purpose could just as well have been to make money.

Of course this is possible without an iPhone. Apple could build it anytime they want, they just don’t. Which I disagree with, but that’s a different argument.

Selling a device that transgressed the boundaries doesn't mean they thought that no boundaries should exist, it just means they knew it was possible to do something technically interesting and would allow them to make money.

If Jobs and Woz thought there should be now penalties for using blue boxes, my guess is that they thought the telco should merely implement a better system, not that everybody should get free access to it.