Good morning
I've got Windows Vista and Windows 7 here.
I intend to create an IPhone application which connects to my website in order to read and show some database records.
I cannot afford a Mac Mini or buying expensive hardware and software.
I was wandering if it's legal and possible to create IPhone applications, running Mac OS X under my Windows, using tools like Pear-PC or similar products?
It's illegal to run Mac OS X on non-Mac PCs. Not that it stops people from doing that.
I don't think you will be able to use Pear-PC as the iPhone SDK requires an Intel processor, but there are lots of other options listed in this question.
It is definitely possible to develop iPhone applications using VMWare to virtualise a Mac OS X guest on a Windows or Linux host. The major problem is that 3D acceleration does not work, so you will not be able to use the Simulator for any OpenGL testing.
As for the legality of it all; it's hard to say especially since you did not mention your location! If you buy legitimate copies of everything and modify them yourself then it ought to be OK. I can say for sure that Apple probably has no way of telling and/or does not care what you use to develop on.