Depending on the journal and its licensing agreement, they may not even accept manuscripts which have been circulated as preprints. Some of them will allow you to publish the corrections made through the review process. Some of them will even allow you to distribute the final article as published. But this is essentially unrelated to the law being discussed.

Well in mathematics and physics the usual thing to do is to first post on arXiv and then submit to the journal. ArXiv references are totally allowed. I heard that the situation is different in other fields but as you say this is not relevant for this discussion.