It is not illegal, however I will look at this from Notch's point of view rather than my own... buckle up, this thought process will get interesting.
"Woo, I have a totally popular game! Now we have Minecraft Realms, and so many servers, and lots of updates coming our way, even though I have a bunch of other games to help with. Hm, how should I make Minecraft Realms more desirable? You know, people PAY servers with donations and get items in return. What if the people are stealing their information? Or worse? They're also making money from my game?!"
Blah McBlah blah and all that... may be more complicated on his level of thought, and he may be asking more questions about servers, and I DO NOT agree with this because it's taking a lot of income from server owners, but Notch is a valid man in this situation. Plus he may want to have more just use Realms.