Ah, I remember the good old days. I think it was 1991, when you didn't even need an ID to fly, I manged to combine a business trip to Chicago in mid-December with a trip over Christmas to Milwaukee for a co-worker, and to top it off UA had a promotion where you got a free ticket for every 8 segments flown.
I think in practice AA would only enforce this rule if someone violated it repeatedly, or was advising others to do it or doing it for them, like a travel agent.
Hidden city is the same thing.
I suspect we all agree at the end of the day, that when the carriers invent insane and insanely complex fares, they get what they deserve. But that's a discussion for another thread.