Vocally public yes… but they wanted to see what the diy scene created, how the power users were using the device and letting them develop the ideas and implement… they would open up and co-opt… boss tools is your drag down for all your settings case in point.
This has been openly admitted to in interviews after the fact.
They 100% did not let the power users and DIY scene exist. It only existed by exploiting OS security vulnerabilities. Every new iOS release required finding a new way to crack it. That's why a lot of people chose Android.
For the first year, Scott Forstall, the Senior Vice President in charge of the iPhone's software, very directly encouraged companies like Pandora[0] to jailbreak iPhones in order to get a head start on app development, protected that community from Steve Jobs' ire, and then used the existence and popularity of jailbreaking to convince Steve that a sandboxed app store would be a better idea than Apple writing every single app for the iPhone[1].
Once native APIs were available, that was true, but before it was even clear that the iPhone would have an app store, they very much did let it flourish.
