Within TOS, generally not and termed as fraudulent activity. See AA Conditions of Carriage and AAdvantage Terms and Conditions, for instance.

Legal? As a seller, you won't likely be legally charged under most circumstances, but you risk your account being closed, losing miles and status. And they hunger to shut brokers down.

As a "buyer" it's not unheard of for such a buyer to show up for checkin, get intercepted and find out the award has been cancelled and you'll have to pay full, walk up fare if you wish to fly.

An interesting thread is: http://www.flyertalk.com/forum/ameri...solidated.html