The original GPL licensed version had full source code and build scripts provided. How is this different?

The LGPLv2 still contains a clause which prevents you from adding additional restrictions, which Apple do in their policy. (10: ... You may not impose any further restrictions on the recipients' exercise of the rights granted herein. )

I believe, even if you compile from source, you still have additional restrictions placed on you, as Apple's policy for example, restricts you from putting the app on any more than 5 devices.

There is no limit on number of devices for iOS apps (provided they are devics you own or control for your own use). The 5 device limit is for DRM protected iTunes media.

How can the end-user then replace the executable on their iOS device ? That is the problem.

Get a developer license? The LGPL 2.x does not disallow tivioization. (Thank god)

That sounds like an "additional restriction" to me if you have to pay Apple.

Pretty sure the [L]GPLv2 is okay with this. For instance, say you have a Motorola Milestone. Motorola provides the changes they made to Linux, as they are required to, but you can't actually build a new kernel and put it on the phone; the Milestone's bootloader protection was never broken.