At the moment when the copyright holder stops ever recompiling the code from scratch and starts just patching binaries.
We are at that point with LLMs.
> The intention behind "preferred form for modification" is to put you as a user on the same level as the copyright holder.
Exactly. And the copyright holders for these LLMs do not ever "recompile". They create brand new works that aren't derivatives at all, but when it comes to modifying the existing work they invariably fine-tune it rather than retraining it.