Rogue Amoeba has already updated their MakeiPhoneRingtone application to 1.1, in order to bring in the Cleverboy hack that was discovered the other day. If you missed it, they also posted a guide on how to turn any audio file into an AAC file with their product Fission (but don't forget that iTunes will also do it for you as well, it just won't cut your file for you). We're still waiting on someone to make a program that turns any file into a ringtone by itself (Rogue Amoeba is talking about adding the functionality straight to Fission), but all the tools are there.
So Apple's whole ringtone system is completely, totally, and devastatingly broken. Why would anyone possibly pay money for ringtones from iTunes when it's so incredibly easy to make your own? As Gruber said in his great and very thorough commentary, the whole Ringtone racket is just that -- a racket. There's no such thing as a "ringtone" -- a ringtone is exactly the same as a song, in a different context. The idea that studios should charge more for you to choose which 30 seconds of a song you want to listen to is complete bunk.
And if you think ringtones are a joke (and I do -- I've been rolling my own ever since my first cellphone), just wait until you hear about "ringles". Unbelievable.