The FAA has said that flying over 400ft is against their regulations. This would, ipso facto, make it illegal (and therefore against forum guidelines). Whether or not the FAA's assertion is enforceable is academic. When a government agency indicates something is illegal, it is so until someone with higher authority says otherwise.
That's how the government wants to operate (and no offense, but your acquiescence will help speed that along). However, that's not how the country works (yet).
The 400ft guideline is a carryover from model aircraft regulations, of which UAS' like Phantoms are not (logically or legally). FAA employees can believe anything they want. As of now, I don't believe any of their proposed UAS guidelines are in force (except the government's usual over-reach into "commercial activity").
I'm not trying to be combative or imply it should be a Wild West scenario, but it's imperative that all government entities strictly follow proper administrative procedures, and that you, as a citizen, hold them to that. The less hand-holding you ask the government to do, the better (and more truly 'free') we can become.
Let's all agree to practice safe flying, no matter what altitude.