Huh? Care to expand on that/give some story links? I'm kinda curious about what people are saying...

wait, its not illegal to distribute the minecraft.jar at all. If you give that to someone who is not a member, what can they do? log into a free account, nope. You can only log in if you are a member. You are able to download the .jar for free anyways from mojang.

Madster, players that didn't pay for Minecraft can still play. They just have to play offline. They can only play on cracked servers, however. It is illegal to distribute the Minecraft jar to players that didn't buy Minecraft. It is legal however, to distribute to ones that bought it.

People got a bit annoyed that he blew off Minecraft onto Jeb as a half finished game. Also, attention whoring with the Yogscast incident and Physchonauts 2.

OK, so let me finish this conversation, since it has kind of gone off topic.

Using MCNostalgia is legal to use because all it does is change the jar file to a different version. The key to your minecraft being authenticated is two things: the lastlogin file and the md5s hash file that is modified every time you login. Also, it is legal to download the jar from someone who illegally uploaded it, and it's harder to get caught if it was illegal. However, it is illegal to upload the jar without permission by Jeb. So I'm assuming that the developer of MCNostalgia got permission from Mojang first before uploading the mod to MinecraftForum.