Red Hat's customers still have the right to redistribute the GPL-licensed source code from RHEL, but Red Hat may end their business relationship with them if that right is exercised. This is still in line with what the GPL requires of Red Hat.
Isn't this limiting in a legal and practical sense?
How this is ethical, and allows unimpeded distribution of FOSS code?
Also, I still need to read and see the agreements myself.
See the 'termination' section of the enterprise agreements from the Red Hat licences page.[1] What constitutes a material breach is specified in Appendix I from the Product Appendices section, and it includes the redistribution of software obtained through the subscription (sections 1.2.f and 1.2.g of Appendix I).
> How this is ethical, and allows unimpeded distribution of FOSS code?
It is designed to discourage the distribution of the code while keeping Red Hat in compliance with the GPL. So it cannot prevent the customer from exercising their GPL rights, but a continued business relationship with the software vendor is not something that the GPL protects. PaX/grsecurity had used a similar tactic with their Linux kernel patches.
If they were only doing "what's required" they would have ditched their upstream first approach to fixes and the only ones seeing their code would be paying customers, or people who the paying customers distributed the code to. The fact that they are still one of the primary contributors not only to the upstream linux kernel but countless other open source projects pretty much by definition means that they are still going well above and beyond "what's required". If you don't like their direction, fine, but pretending like they are entirely freeloading and doing nothing for the broader open source community really weakens your position.
I guess the other issue would be that distributions like Alma or Rocky (and, to varying extents, their users) probably value stability and reliability too highly to be comfortable relying on such a janky form of source distribution.