I will leave this article from the Software Freedom Conservancy which gives an analysis of the legal impact of the new terms of the RHEL CCS distribution in terms of the GPL.

In short, it is as you say, not distributing to the public at large is only a violation of the spirit of the GPL but not an actual legal violation. As for redistribution, the new terms stipulate that RedHat CANNOT STOP YOU from redistributing the code (unless you forgot to remove their icons/artwork/copyrightable stuff), but doing so will put you under consideration for a 30-day notice that your ability to access binaries and sources will be revoked.

Additionally, the SFC has gone ahead and assumed that RedHat will have little inclination to sell a single license to Rocky or Alma for them to them attempt a systematic way to get around their RHEL CCS distribution model. In short, RedHat has come full circle in implementing the full breadth of their hostilities towards downstream projects of their RHEL.

I know RedHat folks justify it as "None of the downstream projects helped patched anything. That the downstream projects were the ones being hostile and RedHat is just finally responding in like." I think the "none" might be over exaggerated, but RedHat has indeed submitted easily over 90% of the patches to RHEL's code base. That said, working with the community to help foster more contributions is the correct answer, not taking the ball and going home.

All in all, RedHat is basically allowed to do what it is doing. But everyone is free to not like this path RedHat has taken themselves down. I mean, there's a lot of "questionable" spirit of FOSS that multiple companies that contribute to open source do with their product. cough Java cough.