alt Hacker NewsBut the key question is will the court accept it as an AGP License or accept the argument that it shouldn't be considered an AGPL licence but a derivative one with extra terms (because it has been modified)? If it is the latter, then everyone using their code would need to comply, in my opinion.
That's not the question. There is an AGPL there and extra terms so that would not be under dispute either side. It would be derivative one from the start.
The court would have to decide the rules of construction in the contract and what to do with conflicting clauses. They would verify what Section 7 says. They would ask "Did the Sneaky Company lead the users to believe they had a license with AGPLv3 terms", was there room for confusion? Was the license ambiguity given that it was take-or-leave it style unfair to users?
The court would probably see evidence from company web site, and public communication to see how they advertised the software. If the company mentions AGPL and is vague about extra terms, it would be bad for the Sneaky Company.