That's an interesting question, because the point of such laws today (but not necessarily when they were enacted; compare the similar Calfornia law) is that undocumented aliens are generally unable to get driving licenses. (They can get driving non-ID "permits" in some states, I think Tennessee anyway; and certain Canadians at least can get Florida licenses.)
My daughter has been living in the USA for 5 years or so, but she doesn't own a car and never bothered to get a US license. When she hires a car they accept her full British EU-style license.
I don't think the law was drafted with the issue of out-of-state US resident aliens (or, for that matter, US citizens; my daughter is a dual national) in mind. In that case, interpretation lies with the courts (common-law system; precedent, stare decisis). The biggest risk would be that an auto insurance company would refuse to pay on the grounds that one is "unlicensed" and then the issue would be resolved, at least for that state.
Note how the two prior Answers disagree. They disagree because -- as so often on Y! Q/A -- people don't know the law and they are guessing. Y! is a terrible place to look for answers to legal questions because most of the answers are rubbish. But it illustrates how the common-law judicial system works: the judges don't know either, but they will decide and then that will become the law. At least for that jurisdiction.
Where a law is genuinely ambiguous -- and USA PATRIOT Act and tax laws aside -- it cannot be used retroactively to punish someone. Except, as I said, financially as in the case of insurance.
ADDENDUM: I have looked at the Indiana DMV Web site. Here's what it says (Driver License Manual, p. 16): "According to the AAA Digest of Motor Laws, foreign motorists from any of the countries included in the United Nations Convention on Road Traffic who visit the United State as bona fide tourists may drive on the out-of-country license for a period not to exceed one year from date of arrival. If the visiting tourist accepts a job or attends school in the United States, he or she then loses tourist status and may be required to obtain a state driver’s license and plates in accordance with the regulations in effect in the state of residence. If he or she intends to become a resident of Indiana, (Refer to section New Residents with Out of Country License on page 7 of this manual)."
Then, on page 7:
"An individual who does not intend to become a resident of Indiana may drive in Indiana on an out-of-country license for a period of one year. An international driving permit must accompany the out-of-country driver license while driving. However, an individual who intends to become a resident of Indiana and wants to obtain an Indiana license must first follow the guidelines to obtain an Indiana learner permit."
Unfortunately, the Manual is wrong. An International Driving License has no legal significance (i.e., affords no privileges) but only serves as a translation of a driving license. And even then, it is largely superfluous in the USA. I drive quite freely in the USA, and hire cars, using my Québec license, which is entirely in French. (There is an interstate compact on driving licenses. My recollection from many years ago is that there was a Northeastern compact that included one or two Canadian provinces. In Googling to find it, I came across this interesting exchange by police officers relative to foreign licenses: http://forums.officer.com/forums/archive/index.php/t-38998.html
The AAA is not where I would go for an authoritative statement of the law, even when cited by Indiana authorities, unless I was defending myself in an Indiana prosecution for unlicensed driving.