Why it's illegal As far I know, Google Apps are free and can be includen on any rom.
Google apps are closed source, and should not really be included in ROMs. The CM team got hit with a cease and desist from Google when they used to include google apps, now for at least official builds you have to download them separately.
Also it's nice to see this phone getting JB, might dust off my old GT540 to check it out on there.