I'm not so sure. Side-loading applications (into Android at least) is painless and is not uncommon among "power users". Of course, there needs to be a level of trust associated with it, which making the codebase open source considerably helps with. There are some people who use their phones entirely without Google Play services installed. I think these are the sorts of people that this application would appeal to the most.
Louis Rossmann's target audience has largely been aimed at the technical user, rather than end-user's who would rather just watch TikTok all day.
I believe it has merits and I'm sure Rossmann and others have done their homework in terms of any legal issues which might arise.
As for Google's terms of service, sure it would prevent it from being listed on the Play store, but who cares? End-users aren't likely to care (or even read) those terms, let alone comply with them.
It'll be interesting to see where (if anywhere) this goes.