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They are not allowed indeed: https://github.com/meta-llama/llama-models/blob/main/models/...

> With respect to any multimodal models included in Llama 3.2, the rights granted under Section 1(a) of the Llama 3.2 Community License Agreement are not being granted to you if you are an individual domiciled in, or a company with a principal place of business in, the European Union. This restriction does not apply to end users of a product or service that incorporates any such multimodal models.

Interesting though, since (some) EU law applies outside the EU anyway, so I'm not sure how much lawyer there is in the text.

This would not apply to the smaller 1B and 3B models, though, if I'm reading this right, since they are text only, not multimodal. Is that correct?
Yes, only the multimodal ones.