The iPod is already "open" -- it supports the format that 99% of music is purchased in, namely, CDs, as well as a number of other open formats, such as MP3s and unprotected AAC. What Real is complaining about is that the iPod doesn't happen to support their own, proprietary DRM.
And make no mistake, this is a desperation move on their part. Conventionally, there are two reasons for a healthy business to sell items at a loss: a) to make it more likely for folks to continue to do business with you when the sale stops, either through some sort of lock-in, or positive experiences with your product, or b) to promote some other, related product that you make a profit on. In the latter case, Apple has the iPod which it uses as its profit centre for its music play, so it can afford to sell essentially "at cost" music. Real has no other major way to make money from selling music except selling more music, so b) doesn't work for Real. In the former case, if the music format is portable, then, price being equal, people will choose the music store that is easiest to use, or with the biggest selection, and iTMS is routinely touted as the winner among all online stores in these qualities. So again, once its half-price sale is over, Real won't have gained much, since it seems unlikely that folks would stick with it.
Sure, this garners Real some short-term publicity, but I just don't think the business model works. It's desperation.