Coupon Connection rules are fairly closely worded to permit only transactions that are within program rules.

This kind of transaction is not "illegal" in the sense that you cannot be sent to jail. However it violated the program rules and can - and has - resulted in people having their tickets cancelled and FF program miles forfeit.

It does happen all the time however. Just look at Craigslist. Based on my limited knowledge, I don't think the airlines are actively out there trying to entrap people. I did hear once that people were using a ruse to sell Delta miles on EBay, something like selling an empty envelope (which would normally be worthless) along with a cover letter that would have a password to access an account with DL miles. It wasn't exactly that, but something like that. The Skymiles people busted that.

In short - yes, Virginia, there is a black market. But that's what it is, a black market. Now keep in mind, I've been to hundreds of concerts and sporting events and I've never ever not even once even thought of buying/selling to/from a scalper (cough choke sputter "These are great seats" yeah right they have a great view of the bullpen). If I had enough miles for a ticket and I didn't want to use it for myself and the miles were about to expire, I might consider doing something like that. But I would definitely not consider it a primary avenue, nor something to be done regularly.