Of course he did. He did roughly the moral equivalent of redistributing MP3s, Google told him to knock it off, he did.

Not even close. This is the moral equivalent of putting a new muffler on your Honda. He is tweaking apps he purchased (all android phone owners have such a license) and distributing those tweaks to people who also have licenses for those apps. You have clearly drunk the kool-aid.

There are devices that do not ship with Android but can run it, like the OpenMoko Freerunner and numerous netbooks. So even if you assume that the license somehow trumps copyright, he could easily have been giving away the apps to people who are not licensed.