They didn't hack any iTunes software, Palm made their device 'compatible' with iTunes.
That does not involve hacking any iTunes code.
It's a hack.
Palm's reptuation is headed downhill FAST. And if it really is their intention to use this move as a preulde to a larger legal battle, then they really are stupid, and in the end their customers are the ones who will really lose out.
It's amazing, really. Looking at Psystar, Palm, the latest "Store" ripoffs from Microsoft, the many iPhone knockoffs, etc., it's clear that Apple is writing the entire industry's software and manufacturing the hardware that everyone and their dog is ripping off, and not in a small way, either. And some of them think they can get away with simply taking elements of Apple's designs and services wholesale. Only problem is, it doesn't work like that.
It's sad to see, but except for a few specific exceptions, the rest of the industry is bankrupt when it comes to ideas. Some of these also-rans seem to think that if they don't particularly like whatever aspect of Apple's legal, fully-compliant business model, they can just go ahead and challenge it. That's their right, obviously, no matter how ludicrous, but it's garbage like this that leads Apple to to become even more closed and "secretive." Can't say I blame Apple.