Personally I don't think Apple cares if there are now 10 or 20 FreePascal apps in their app store, so we should be somewhat safe if FreePascal won't the become new major programming language for iPhone App development.

Still, I think the new TOS (terms of service) leave some room for interpretation and don't forget it's a still a beta TOS and can change until the final release of iPhone OS 4. I wouldn't throw in the towel just yet. There is a lot of anger against Apple at the moment from a lot sides, and Apple doesn't clarify the new TOS clearly, just points to it and leaves a state of FUD.