No, it's not against the rules.
For everything you modify, you must make those modifications available. That can simply be as a directory full of .patch files, you're not obliged to release easy-to-install binaries or anything. Some Linux vendors extend Linux with their own, proprietary software. For instance, Xandros and SuSE do this. Redhat release all their own software under the GPL, but they don't actually have to.
So, for example you have to pay for Xandros. If you download it for free, you're warezing it and will be spat upon by all
This is allowed, because any modifications Xandros made to KDE, the kernel, whatever are available for public download as patches or have been contributed back to the authors, but what Xandros actually sell is the "integrated whole" - they're not obliged to give the easy-to-use ISOs away for free, even though the individual components are available as such.
Redhat and some other distros (ie debian, gentoo etc) are freely distributable by anybody. Redhat make money by selling support and services. "Support" in this context is not tech support for you and me, it's corporate level 24/7 support and services. They make a lot of money doing this as well - the software is free, but that's not good enough for corps, they need support also.
So, there are many ways to make money out of free software.