Banned by who? The app is sideloaded, it isn’t on the App Store.
(“Sideloaded” here meaning from Apple/your phone’s point of view you developed the app and are just testing it, which is a fairly essential feature)
Theoretically, Apple has the ability to blacklist and purge apps installed on your device. This can be useful when they encounter new malware on their App Store, for example.
In practice, this would cost them billions if they don't do it very very quickly. The grace period for the European DMA will be ending in three to four months and this is exactly the type of anti-competitive behaviour the law was designed to ban.
It shouldn't take them that long to detect the API access this tool uses to generate free developer certificates if they really cared.
That may start an arms race that'll inevitably be too costly for Apple to continue, but after the initial blow I expect many people to drop the platform all together, giving Apple a one-time quick win.
It doesn’t create a free dev certificate, it uses the same tools as anyone downloading XCode, writing a program and installing on their phone would, it is a completely Apple-certified workflow automated to do the resigning every week.
I know it's certified and automated, but that doesn't stop Apple from detecting and blocking it somehow. There is a certificate process that's crucial to install the app onto the device and that gives Apple the control it may need to make the apps un-installable for at least a little while.
