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Sure, lua is open source. As with XML. But in the end, it's still, in fact, Blizzard's API that's being used. People need to keep this in mind while they're debating over open source material. Mods are not possible without this and is owned by Blizz. To that extend, they do have complete control over what mods can do what and how. Keeping this thought in mind, mods like Carbonite were making money off of Blizzard's API, which is in all technicality, illegal.
Simplified:
Without Blizzard's API (which is copyrighted, mind you), you cannot make a mod with lua/XML that can interact with WoW. To create an interface that utilizes that copyrighted material and then charge for it is illegal. It's on the same line as going to a KFC, buying a bucket of chicken then selling it to others.
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