This is really funny stuff. From what I heard, the board of directors showed last night just how ridiculous this has gotten. It’s a fiasco. At this point, my humble recommendation (much like one of the commenters at Living in LoCo) is to completely ignore the HOA, until they start to raise a ruckus in July ’08. When they do, take them to court.
The HOA will lose. Period. The residents with these businesses have plenty of precedent, and the board can ignore it if they want, but a judge will not.