Note that "open source" != "under a OSI or FSF approved licence" and that at no time that I've seen does the developer claim it's "Free Software" (which it certainly isn't, although it does dynamically link a GPL'd library...).
Adding that kind of restriction will make any license a non-OpenSource license. This is not orthogonal but an important aspect.
Maybe a failing analogy helps here. From a linguistic point of view, the above is like saying: "Belarus is a democracy, with an added restriction regarding elections."
> Note that "open source" != "under a OSI or FSF approved licence"
This statement is plain wrong. OSI defined the term Open Source very precisely, so using it to describe non-compliant licenses is a clear misuse of that term. Even Microsoft doesn't do that, despite their power! Instead, they coined an own term to describe their less-restrictive activities: "Shared Source". (And yes, a small minority of Microsoft's Shared Source projects are also Open Source.)
So although there are different opinions about which term to prefer, "Open Source" has technically the same meaning as "Free Software". This has been clearly stated by the Open Source movement from the very beginning. In other words, the term Open Source has been designed to be a byword for Free Software. You can find that in the early articles of ESR:
http://www.catb.org/~esr/open-source.html
Finally, note that this license won't ever be approved by neither OSI nor FSF, because it violates an essential freedom. Of course you can always say: "I don't care about that certain kind of freedom". That's okay. But then you should neither claim to do "Open Source" nor to do "Free Software". That's unfair on all real Open Source developers who grant that freedom.
They may have given a definition but that does not give them a monopoly over usage of the term. Language does not have a One Definition Rule! For example, my dictionary states:
open-source: Computing denoting software for which the
original source code is made freely available and may be
redistributed with or without modification.
I understand there are political reasons to have open source exactly equivalent with the OSI definition. However, this does not seem to have happened.
This is only true for day-to-day words. However, legal words and technical terms need strict, stable definitions that are equally understood at least by all experts in that field. Otherwise, serious communication would become next to impossible, let alone serious discussions.
> For example, my dictionary states:
Dictionaries don't provide exact definitions. However, your quoted description seems to be the best you can get out of three lines. If you care to read 4-6 lines, you'll get the quite accurate FSF definition. If you care to read even 10+ lines, you'll get the detailed OSI definition.
> Indeed, this definition is more in line with what many people think when they hear "open source".
That's an important issue. Neither the term Free Software nor the term Open Source are completely self-explanatory. So people will inevitably have misconceptions about those if they've neither read a proper definition, nor had someone explaining it well enough to them.
The concrete issue with the term "Free Software" is that people might think: Oh, this software is free (no cost), so it must be Free Software. Eric S. Raymond and others tried to solve that problem by inventing a new synonym, "Open Source".
However, the term "Open Source" has issues as well, because people might think: Oh, the source code lies open in front of me, so it must be Open Source.
Note that this is a general problem. Hardly any technical term is totally self-evident to ordinary people. Just because a technical term is not self-explanatory doesn't mean you can simply ignore its exact definition.
It's not as liberating as Open Souce, but without gradations in the standard you force people to choose between two radicalized tendencies.