Is it possible to compile and run an Xcode project on a jailbroken device without a paid developer certificate?
The following instructional steps to accomplish this purpose are taken from:
http://iphonedevwiki.net/index.php/Xcode

My findings and actions are provided under each step.

1. Create a self-signed code-signing certificate with the name “iPhone Developer” on the “login” (default) keychain using Keychain Access.


I took screenshots as I followed the above instruction. 
I left most fields blank or at their default value.




2. Open /Applications/Xcode.app/Contents/Developer/Platforms/iPhoneOS.platform/Info.plist (4.2 or below: /Developer/Platforms/iPhoneOS.platform/Info.plist). You may need root permission.


I'm using Xcode 4.6, so I opened the former .plist file.


3. Replace all occurrences of XCiPhoneOSCodeSignContext by XCCodeSignContext. There are three of them (XCode Version 3.2.4+).


I made three modifications as the screenshots indicate.






4. Save the file and restart Xcode.


Saved the file.


5. Make sure you have ldid on your Mac. Place a copy somewhere e.g. in /usr/local/bin.


I downloaded ldid from http://code.google.com/p/networkpx/downloads/detail?name=ldid
I put it in /usr/local/bin.


6. Create the a Python script ldid3.py right next to the ldid program. Make it executable. Fill it with: 

#!/usr/bin/env python

from sys import argv
from subprocess import check_call
from os.path import basename, dirname, splitext, join
from tempfile import NamedTemporaryFile

app = argv[-1]
ldid_path = join(dirname(__file__), 'ldid')
obj_path = join(app, splitext(basename(app))[0])

if '-gta' not in argv:
    check_call([ldid_path, '-S', obj_path])
else:
    with NamedTemporaryFile('w+b', 0) as f:
        f.write("""
&lt;!DOCTYPE plist PUBLIC "-//Apple//DTD PLIST 1.0//EN" "http://www.apple.com/DTDs/PropertyList-1.0.dtd"&gt;
&lt;plist version="1.0"&gt;
  &lt;dict&gt;
    &lt;key&gt;get-task-allow&lt;/key&gt;
    &lt;true/&gt;
  &lt;/dict&gt;
&lt;/plist&gt;
        """)
        check_call([ldid_path, '-S' + f.name, obj_path])



I created a new plain text file and copy-pasted the above code into it.
I saved this file as ldid3.py and stored it in the /usr/local/bin directory.
In terminal, ran chmod 777 /usr/local/bin/ldid3.py.


7. Open iPhoneCodeSign.xcspec. This file can be found in [For Xcode 4.6: /Applications/Xcode.app/Contents/Developer/Platforms/iPhoneOS.platform/Developer/Library/Xcode/Specifications/iPhoneCodeSign.xcspec]:

8. Change the entry in the file from calling codesign to ldid3.py.


As per instruction official instruction, converted the spec file to plain text by typing in console: sudo plutil -convert xml1 /Applications/Xcode.app/Contents/Developer/Platforms/iPhoneOS.platform/Developer/Library/Xcode/Specifications/iPhoneCodeSign.xcspec
I opened the file with TextEdit.
Replaced &lt;key&gt;CommandLine&lt;/key&gt;&lt;string&gt;/usr/bin/codesign&lt;/string&gt; with &lt;key&gt;CommandLine&lt;/key&gt;&lt;string&gt;/usr/local/bin/ldid3.py&lt;/string&gt;.


9. Save the file and restart Xcode.


I saved the file and quit TextEdit.


10. Create a file /var/mobile/tdmtanf on the device, to enable Apple's "TDMTANF bypass" in installd (warning: doing so will also put you in a sandboxed GameCenter).


I create an empty text file in Windows, named it tdmtanf, SSH'd into my iPod, uploaded it to /var/mobile/, and reboot my iPod.


Now that all that is over with...

I open my existing Xcode project and hit Run. It works in the iOS Simulator without any problems.



I make sure that Code Signing is set to use the certificate set up in step 1.



I build the app (Project > Build). A success message follows.

I grab my app folder TicTacToe.app from /Libary/Developer/Xcode/DerivedData/TicTacToe-cjgzmoxtflyegtfypsbxbuiuwxns/Build/Products/Debug-iphoneos/ and transfer it to my Windows machine to install onto my iPod.

In an attempt to install the app to my iPod, I drag TicTacToe.app onto the applications section of iPhone Configuration Utility, but I received this error message saying that my app "is not a valid mobile application."

I have also tried manually installing the app using iFunbox and the AppCake app found in Cydia. Both fail.




As a point of interest, because as I've Googled around, I've noticed many people mention the importance of this: I do have AppSync installed. (Sorry for the huge screenshot. If I should take it down, please let me know!)



Conclusion

So despite following the instructions closely, several times, my app is not recognized by iPhone Configuration Utility as a valid app. I cannot install the app manually using programs like iFunbox, or Cydia apps like AppCake.

I suspect the app is indeed invalid, but having followed the instructions carefully, I'm not sure why.

Can anyone tell me why my app is not valid, and what I can do to fix this, besides coughing up money that is?