See, the problem with Apple's strategy right now is that those 'brilliant engineers' are engaged firefighting the effort to break into their good work. Even if that is minimal effort it would still be better spent making the iPhone more like the portable computer Jobs sold to everyone at the start of the year. I think the expectation was raised that it would be a nice open platform that could possibly change mobile computing.
I am reminded of the early days of the Lisa and the Macintosh. Because of the cost and "newness" of the Lisa, Apple wanted to exercise complete control over the system and it's applications for a time to ensure that everything was presented in a consistent way to the user base as it grew.
With the Macintosh, they decided to get the third-party developers to bear the brunt of the application development in the hopes it would draw interest to it.
While the Macintosh was a success and the Lisa was not, Apple's licensing schema did allow companies like Microsoft to learn how the system worked and then develop their own counter - Windows. And then when they (for a time) stopped developing their existing Macintosh software while they ported it over to Windows and enhanced it, that drove a lot of folks (back) into the PC fold.
So an totally open iPhone SDK would bring us many new and cool aps, but one wonders if would also allow Google and those MotoWhatever folks (sorry, the name escapes me - they're porting Linux or something to mobile devices) to leverage all the iPhone's features, make it cheaper and better, and we end up with "deja vu all over again" where a single-digit percentage of us use iPhones while the rest of the world uses something else that used the iPhone as a foundation.
Considering Apple is as much a hardware company now as they were two decades ago (even if content is becoming more and more important), Steve Jobs might not want the iPhone to become the Mac to the gPhone's (or someone else's) Windows...