Partial fix

New development on the banning. It looks like Google has recognized that it was a bit hasty to just pull tethering apps from the Android Market altogether. Here's what they had to say:

"We inadvertently unpublished your application for all mobile providers; if you like, we can restore your app so that all Android Market users outside the T-Mobile US network will have access to your application."

It doesn't really give a definite answer to my original questions, but it hints at a direction. This seems to indicate that they have a mechanism in place to filter Market listings by carrier. I'm still not too keen on Google allowing the Market to be controlled by carriers at all, but at least we might not have to keep track of half a dozen different Terms of Service just to figure out what we can and can't publish. Users may not agree with my mild optimism here, since they'll be the ones with limited access to apps.

Thanks for all the support and discussion of this issue. I like to think that community pressure was what led Google to reconsider this decision. Keep it up and maybe we can free the Market from carrier rules altogether, or at least make sure that the Android OS proper stays open and suits the community's needs.