Other than the obvious ongoing legal issues surrounding jalibreaking the iPhone, does using an jailbroken phone for "official legal SDK development" cause any issues?
Bascially can a jailbroken iPhone work fine for a production development environment, allowing the same provisioning, testing, etc as a stock iPhone in terms of the SDK and related processes?
As far as i know. there is no problem to use a jailbroken iPhone as your development iPhone. I test all my applications on a jailbroken and a non-jailbroken phone and didn't found any differences yet.
If you have jailbroken your device and broken authenticity (to run unsigned code) it is possible you have a code signing issue that would not be aware to you unless you check the app on a non-broken device. However if you are caught up in the acceptance process a jailbroken device can be useful because you get to test on device earlier :P
That said this is very unlikely seeing as the amount of trouble you have to go through to get to that point almost guarantees you have some clue as to what you are doing.
The Apple Developer agreement has been updated to forbid developers from jailbreaking (but you did say aside from legal issues)...
To answer your question directly, no I have not had any problems :-)