“Distillation” is just indirectly pirating the largely pirated training data used to train the original model.

“You stole my warez!”

If we do it, it's training a model. When they do it, it's distillation attack. - Anthropic

"You are distilling what I have rightfully pirated."

Is there even a steelman against this?

The current steelman argument against this is "China bad, west good".