It has nothing to do with the connector, it has to do with the ID values stored within the device. Every USB device has two things, a Vendor ID (VID) and a Product ID (PID). The Vendor ID indicates who created the device, and the product ID indicates what product this is. These ID's are licensed from the USB Consortium for a fee -- well, the VID is. The VID is unique for every company; the company is then free to create PID's as they see fit.
What Palm is doing is, instead of using their own VID, they are using Apple's VID and the PID for the iPhone to get their device to sync to iTunes. This is a clear violation of the USB Specification and the licensing agreement with the USB association. It CAN cause other issues because when you plug a device into the USB, the operating system reads the VID and PID values and then tries to load the device driver associated with those VID or PIDs. This *could* cause some confusion in the system and prevent valid Apple products from getting the correct driver loaded. I don't see that as too much of the problem, but the real fact is that for the average consumer, it could cause some issues that would eventually cause problems for Apple or make them look bad.
I do not agree with Palm doing this, and I do think that they should follow the rules.
Legality wise, I think there isn't much there. Sure they are using Apple's VID, and Apple legally licensed that ID. But are they breaking any laws? I don't think so. Maybe if Apple could prove loss of reputation in court, but I think it would be a long shot.
Think of the VID as the brand name when it comes to USB. If Palm decided to take the Palm Pre and sell it as "Apple iPhone" people would be all over them about it. But from the "USB" view that is exactly what they are doing. Imagine if you purchased a new BMW 325i, only to find out that it is really a Saturn with the BMW logo glued over the name. Then when you took it to the BMW dealer and they refused to work on it, do you blame BMW? No, it's not their car.
Am I making sense or just babbling?