Paying the list price Anthropic decided upon for outputs from an LLM, then using those outputs for your work? Or sourcing those outputs from others that paid for the service, and using those? If that's "distillation", it seems fine to me. And a lot like what most are doing with these same providers.

Anthropic: training AI is "transformative", it's not copyright infringement if we don't re-transmit the copyrighted books we trained on

Anthropic: training AI models on our outputs is stealing our secret sauce, outputs that could only be produced by us

Anthropic: AI model outputs are unreliable and do not reflect Anthropic's views, we are not liable if they harm you

(not exact quotes, they're "distilled")

So Anthropic "distills" knowledge of others with reckless abandon, packages it up, sells it to you, claims it's your fault if anything bad happens but then also lobbies to treat you as a criminal if the outputs you paid for end up being transformed into any sort of competition for them. By you, or others that use the outputs you paid for.