As far as I can tell, Real just engineered some some software that works on the iPod and Apple has no grounds for complaining unless Real copied Apple's code. Apple can probably render it useless with firmware updates, but Apple has to be careful because if it starts acting like a monopoly, it could draw the wrong kind of attention. Real could be setting Apple up for a restraint of trade case.

Unless I'm missing something, this is like Apple telling Adobe that it can't make movie editing software for the Mac.