You're right, they couldn't tell. But that doesn't mean they're not disallowed -- unless you're writing C, C++, Obj-C, or Javascript, it's disallowed, period. But that doesn't mean people won't do it.
I'm not sure I agree that code translation is entirely disallowed.
Part of the problem, though, is that the legalese in the iphone 4 revision is maddeningly obscure and unhelpful. We're not even sure if embedded Lua interpreters are really banned. I'm sure Apple is considering that very question.