It's not that Apple don't want you to use them or that they're necessarily illegal, just unlike the Appstore, they have no control over them.
That's a good and a bad thing as the apps will be useful but perhaps not of the standard Apple expect. I imagine, although I've heard of a load of crashes, that the Apps on the Appstore fit a certain level of quality control, at least cosmetically.
I think v2 can be broken although there are some updates just after v2 which change the baseband or something - which may make unlocking/jailbreaking a thing of the past. I think that's the case anyway, I've been a bit out of the loop.