> if it's such a problem, have you thought about straight up merging the mini-app store and sandboxed GPS package from the GrapheneOS codebase?
I'm sure at least someone has thought about doing that. However, including any amount of GrapheneOS code is considered a no-go.
> Or, to throw another wild guess, are you perhaps concerned that the "blind eye" only extends to Graphene, since they target Google's own devices only [...]
The "blind eye" in this case is the assumption that the permission to use Google Apps is attached to the device, not the software that is running on it (I'm not sure if this was ever communicated by Google in private or publicly).
While GrapheneOS still has the lowest amount of friction (because they only ever ship the devices that Google ships, with the respectively matching Android version), we hope that this licensing assumption applies to everyone equally.
> (and are lower profile in general, and also apparently contribute a lot of upstream code), while Lineage is much more widespread and well-known so it wouldn't get treated as nicely?
LineageOS being somewhat well-known and wide-spread is indeed something to be considered. As an example, PixelExperience both ships Google Apps built-in and has obvious points of conflict in regards to trademark issues, yet continues existing. We are not keen on finding out whether Google has changed their stance or whether PixelExperience is simply small enough to be flying under Google's lawyers' radars.
For what it's worth, we regularly try to contribute upstream as well, but get ghosted most of the time on things that aren't trivial. :^)