The legal question is whether "the aircraft is flown strictly for hobby or recreational use."

To me, this suggests:

(1) the statute looks to the purpose of the flight when the flight occurred--later developments don't matter

(2) actions of third-parties not involved in the operation of the drone also don't matter

Remember, the FAA has the authority to regulate drone flight for commercial purposes. They don't have the authority to regulate Youtube, other people's filming, etc.

I wonder if I could have a small business where I sell my services for some small hourly fee to teach other RC enthusiasts how to fly RC planes. During this training I'd probably be using the RC planes myself, and it would be for a commercial purpose...

I see a few RC instructor business on google that has a commercial pilot as the instructor, I wonder if that is required.

Interesting question. The AMA (model airplane hobby organization) has invited members of the model airplane community to submit comments to the FAA seeking clarification on precisely that issue.

See: http://amablog.modelaircraft.org/amagov/2015/03/18/ama-respo...

If you are interested, you should submit one.

What if I fly and record footage and then sell the SD card for $500.. I was selling the SS card not the footage. What an interesting court case this is going to turn into, I'm not sure how many hairs need to be split before someone reasonable will come along and call BS on the FAAs position.

You still own copyright on the footage, and it can't be used without your permission.

If you mark the footage as public domain?

It would only work if the courts think it should work. Contrary to popular belief legal 'hacks' can work, but there is no guarantee.

Agreed... what if the person flying the drone has no knowledge of the intent by a third party to eventually monetize the video? Can their flying be retroactively and involuntarily criminalized by a third party who is given and then monetizes the footage?

There are some fairly major online video productions that feature RC aircraft heavily. http://flitetest.com/ is a major YouTube channel dedicated to model aviation. Ever major tech journalism sites has probably covered consumer-ready aircraft like DJI's products.

That there could be legal challenges for these companies is rage-inducing. It is completely ludicrous. It's a waste of everyone's time and money (both taxpayers paying for the bureaucracy, and the companies defending the legal challenges), and does absolutely nothing for safety.