Here is a link to the ARRL East Bay section, in which Andy Oppel, N6AJO, Vice Director, Pacific Division describes his view of the problem. The FAQ page which mentioned the two-way radio exclusion is no longer linked from the main pages. It has been replaced by a page does not include the exclusion:
http://www.eastbaysectionarrl.org/2008/04/16/ca-hands-free-law-we-are-not-ou...
---Michael, NO6O