[made]

Avid's thing is you move the iLok from machine to machine when you need to change machines.

yeah, this is exactly what is done. without the physical USB cable connection

Besides who's to say the micro controller that's being used can't be hacked over the network and made to do things that weren't designed into the original code? Theoretically the code could be rewritten to allow sharing the iLok over many machines at the same time.

what micro controller do you mean? the iLok? Of course that could be rewritten by someone. But it makes no difference on what USB port it's connected...

it's Pace/iLok that may step up and stop this, they are more threatened by this than Avid

what's the threat? less sales in iLoks due to less loss and theft?