How could one not say the criminal act of theft is not crossing the line? They generated the code worth monetary value without surrendering any money - so if not theft, it is at least counterfeiting non-governmental legal tender.
While I agree Apple shares some of the blame for using an algorithm alone (versus an algorithm for 'fast processing' followed by verification in a database), it does not make the criminal act any less so. If you walk into a convenience store and do not see an attendant, it does not mean you are free to grab whatever is close by and leave legally.
As to the price per song, that's a bit more complicated. The lack of physical media and warehouse/distribution chains reduce costs, but maintaining servers and paying bandwidth probably eat much of that up. Thus, for individual DRM-free songs I think $0.99 is reasonable. If you buy a whole set of songs
at the same time, it should cost no more than the marketed package (either the cost of the CD or the multi-CD set at MSRP). For songs with DRM on it, the $0.99 price should be reduced to reflect the restricted nature of the product.
Would I pay $0.99 per song? No. I believe that the artists of the songs should be the main recipients of the income, much in the same way that I believe that farmers should be the recipients of the cost of food I purchase. Next should come the retailers of the product who act as "intermediary" purchasers - sine they should assume a risk if the product does not sell. Last should come the supplemental manufacturing chains - such as the studios that maintain the costly equipment to record the songs and pay the engineers to make it sound perfect. The current system does not support this pricing structure.
Of course, the RIAA tactics have prevented me from buying music for several years. I will not buy original CDs, used CDs (which helps drive the original CD markets), or digital songs due to what I view as criminal extortion (the 'settle for $3k or we'll sue and cost you more than $3k in legal fees' tactic). Honestly, its not all that bad - I've rediscovered the pleasure of reading again... that, and I now have time to come to Tom's and post!