The FFmpeg violation would most likely have been a simple failure to provide attribution and hosting of the FFmpeg source used and compiler flags. They have a mailing list and IRC, but is there an "official" legal dept? Who did you talk to? It's a large collective, and with many independent contributors. I don't know what you mean by "encrypted binaries". But it would also mean that BI would severely handicap its performance compared to everyone else - seeing as they would be using an old software only h264 encoder. If transcoding IS needed, then yes, it would be more than just filling out paperwork.
If it was indeed a mistake, it would be trivial to rip it out. So, if you'll indulge me: If you CAN relay video from a camera - as is - and the video is H.264, I'm sure you'd agree that in this scenario, there's little need for x264, and thus it's likely that x264 was simply included by a mistake because BI just used the default build config. Now, you may not believe that, but let's pretend for a second I have a little experience in writing the code used in VMS clients and servers and maybe know a thing or two about this. Transcoding is not necessary at all - in fact, I would bet that most VMS's avoid it if possible. I believe this is just not true, and - frankly - it suggests that you are a little in the dark about how a VMS can (and often do) work. BI's severe restriction would be the inability to send video to it's mobile and client apps if it didn't have h.264 encoding.
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