Let's person A has a lot of money, so he buys 1 million or so bitcoins. After he buys those he goes out and buys a load of iPods, for which he flips at 0.5 bitcoins. So by doing this he drives up the price of bitcoins to $100+ and then proceeds to dump the amassed bitcoins at a large profit. Legal and would this work?
You would run into massive problems at every stage of that plan. First buying that many Bitcoins would take a very long time and/or drive up the price very high. Second, if an iPod isn't already worth 0.5 Bitcoins, you would be taking a massive loss in trying to boost the price of Bitcoins. Finally, assuming you do get the price you want, cashing out is going to be an issue. You would have to do it slowly or else you would crash the market, and at the same time continue to offer the deal or else the price would fall (if that is the only thing supporting it).
Its practically a given that you would lose a ton of money, so it doesn't matter if it is legal or not.