I think the “unfair” bit refers to the fact that Apple presumably has to pay more per track and is, for all intents and purposes, forced to sell “inferior goods” (never mind whether they actually would choose to use DRM and enforce a vendor lock-in if given the choice).
I don’t know whether it’s legal or not, but I suspect it is. Just a case of one company negotiating a better deal than the other, technically. No ulterior motives at work there… 
Ultimately, I agree with you. Fair or not, it’s an unusual case where the market is actually working in the best interests of the consumer. Plus, I have no love for the ITMS, and wish nothing more than to never have to touch it again. It sucked when I got one of the new iPods back when they came out and, due to new encryption, had to use iTunes to manage it. Thankfully, now MediaMonkey, WinAmp, et. al. are able to manage it, meaning iTunes need never sully my hard disk again.