This is incorrect, iOS' network stack is NOT slimmed down the point it couldn't do what I want it to do (wireless router).
The 'personal hotspot' functionality provides the following functionalities:
1. DHCP server: every device connecting to the iPhone's Wifi gets an IP address assigned by the iPhone
2. DNS resolution: any name resolution requests from the devices connected via personal hotspot are dealt by the iPhone.
3. network router, any network package to/from any connected device is routed properly within and outside of the HotSpot's network segment.
Btw, iOS is based on 4.4BSD-Lite2 and FreeBSD (https://en.wikipedia.org/wiki/Berkeley_Software_Distribution)
In order to provide a wireless router's functionality, Only 1. and 3. are needed, so the Hotspot functionality of iOS already has everything needed, no need to extend.
Btw, I am not buying the iPhone 'FOR THAT', I bought and like the iPhone for many reasons, I was only asking whether Apple did not limit the hotspot's functionality but the answer is the did.
By now this becomes a pointless discussion, Apple did limit this functionality on purpose and they are not going to enable it because somebody (me) comes up with a corner case that doesn't help driving further sales and I understand that. I am going to continue to use my RasPi as wireless router, end of discussion.