First off, I don't know why you'd want to do the latter. Is any third-party music player software really going to outperform the iPhone's music player in basic functionality? I doubt it. And can anyone really blame Apple for wanting to protect its own player? I can understand why it would want to prevent Real -- or any other company -- from crafting a version of RealPlayer or other music-playing software that would encroach on one of the core applications of the iPhone.
However, I would hope that this doesn't mean developers can't craft plug-ins or other features that can be added to the iPhone's music player. For one, the equalizer needs a little help. It may have a ton of presets that let you change the sound of your music, but I want my own sliders. I think a fully user-customizable, 7-band EQ should be a minimum for the iPhone's music player. But that's just me. Other than that, I can't think of any real weaknesses that the player has. It's vastly more usable than any other player on the market.
The Inquirer, however, says, "This [restricted access] makes it impossible for iLike, Last.fm, Qloud, or OnTour to create iPhone-compatible widgets that might expand basic iTunes functions." That statement scares me a bit, and leads me to believe that my dream of seeing a nice EQ for the iPhone is going to remain but a dream ... unless Apple itself makes one.
That aside, where does this leave developers? Is this really a vexing issue? Did anyone think that Apple would open the iPhone so wide that third parties would be able to create applications to supplant those of the iPhone? I didn't.
None of this matters to the hacker community, which will continue to do as it pleases with the iPhone.