No, it does not mean that circularly polarized antennas like the Penetrator are illegal. LPFM stations are allowed to use circularly polarized antennas, as specified in §73.816(a) of the FCC rules. This regulation permits LPFM stations to use antennas with horizontal only polarization, vertical only polarization, circular polarization, or elliptical polarization. Therefore, you can use circularly polarized antennas like the Penetrator without violating the rules.
No, the absence of a specified vertical power in the construction permit does not prohibit the use of vertical or circular polarized antennas by an LPFM station. LPFM stations are generally allowed to use either horizontal or circular polarization. When constructing your LPFM station, you have some flexibility in choosing the antenna polarization that best suits your coverage needs.