It may or may not be legal. I suspect the courts will have to decide that very matter in the near future.
But regardless of the legality - I already paid for the card and intend on using it to my satisfaction. I may very well take Luca's suggestion and not buy an Nvidia card next time if they haven't changed their policy and all else is equal. But in the mean time I'm going to keep using Physx on the card I already have, regardless of what the law or Nvidia says about it. I know what I believe is right and Nvidia is powerless to stop me from acting on it.