I'm developing an application using iText. iText, unless a commercial license is purchased, forces you to abide by the AGPL. My plan is to sell commercial pre-compiled copies of my software at a small cost, while leaving the source code on github for those technically adept to compile it themselves. Is this legal? Also, am I permitted to distribute iText binaries?
If you are the sole developer or if you hold the copyright on all the code for other reasons, you can do with it as you please.
The model you mentioned is using a strong copy-left license and selling exceptions to it. People who want to use your code in non-free software have to pay for this exception and they then get your code under a different license.
If you accept contributions from others, this becomes more difficult because they may contribute under the AGPL. In this case, you would also have to comply with the AGPL unless you ask for a copyright assigment or something similar.
In any case, you are free to not distribute binaries to the general public. The requirement of the AGPL is to give the source code to people who have a binary copy (or use one over a network), but not the other way around. The reason is that the source code enables you to exercise the four freedoms.
Everyone else is free to use your source code and compile it, though. They may even decide to then distribute those binaries and that would also be legal as long as the comply with the AGPL.
"My plan is to sell commercial pre-compiled copies of my software at a small cost, while leaving the source code on github for those technically adept to compile it themselves."
When your application includes iText, and you licensed it under the AGPL, you need to abide by the license conditions, especially section 6 of the AGPL (Conveying Non-Source Forms). The form 6d is essentially what you suggest:
d) Convey the object code by offering access from a designated place (gratis or for a charge), and offer equivalent access to the Corresponding Source in the same way through the same place at no further charge. You need not require recipients to copy the Corresponding Source along with the object code. If the place to copy the object code is a network server, the Corresponding Source may be on a different server (operated by you or a third party) that supports equivalent copying facilities, provided you maintain clear directions next to the object code saying where to find the Corresponding Source. Regardless of what server hosts the Corresponding Source, you remain obligated to ensure that it is available for as long as needed to satisfy these requirements.
"Am I permitted to distribute iText binaries?"
When you received iText under the AGPL, you can distribute binaries when you also include the sourcecode or a written offer to provide the sourcecode if asked to do so.
When you bought a commercial license, the conditions are explained in the proprietary license agreement.