I have a feeling that if PDA developer (hardware wise) wanted to take the market by storm, it would be done through linux. If you use linux, nearly all restrictions that were imposed by MS will be gone (there may be no restrictions at all). That includes the processor type, the form factor, and a load of other, not so ovious items. Here is the catch though, in order to be truely effective, they should offer way to use the PocketPC2002 OS. For instance, a download from their site. I have a feeling that MS's regulations mainly apply to devices being sold with the PocketPC2002 OS preinstalled. However, if a company wants to pay for the os, and give customers a chance to switch, I bet they wouldn't have a problem, since it would allow them to claim a larger portion of the market.
Sorry if this doesn't make much sense, it does in my mind, but I got to bed really late last night, and didn't get much sleep.