The iPhone is pretty much marketed and sold as a multi-purpose computing device. There is a huge market for installing software on it, there is a development environment etc. People know this when they buy it. It is very obviously a computer-phone.
When you buy a microwave, you are buying it to heat food. You are not expecting to be able to browse the web on it or play games. If you are, then you need your head examined or to invent this new product (if you are right that it's a reasonable/desirable expectation, there should be a market for it). I think the distinction is actually very very clear, continuum or not.
Once the microwave starts allowing for remote control and twittering its status, the line does become more blurred ;)
So, iPod classic is OK but iPod touch is not? What about a TV? A TV that can play youtube viedos? A car? The kindle? The drobo? Are they all multi-purpose computing devices? The distinction is actually not as very very clear as you think.
Anywhere minor modifications to the firmware could cause serious injury, it makes sense to restrict access to the firmware, because the firmware is a very small part of a hardware system that has been well-tested for safety. This makes the car and the microwave off limits.
iPod classic, it's not going to hurt anyone if you screw with the firmware, you should be free to tinker to your heart's content. There are also enough obvious deficiencies (lack of support for a variety of codecs) which can be improved.