As far as I can surmise, an app would be banned if:
* it would offend a large potential group of customers
* it offends even a moderate but vocal set of existing customers
* it spews and/or supports the spewing of FUD
* it makes the iPhone or Apple look bad
All in all, these are pretty easy to guess guidelines. They're also very geared towards keeping and attracting customers, and thus, the bottom line.
I own Apple products, I love my Apple products, I love Steve Jobs' talent for creating them. But let's hold off on beautifying the man shall we?
This sentence
> Apple has complete control over the kind of information you can get on your phone, and it exercises that right seemingly capriciously.
is just blatantly wrong, of course. It only has (near) complete control over the native apps you can get on your phone. There are several other obvious channels of information that it does not control.
VoxelBoy, I noticed your username. I'm a graphics programmer --- I'd love to read about the type of stuff you've done, or simply chat. Have you looked into Sparse Voxel Octrees? Toss me an email (it's in my profile).
With that in mind Apple is really closer to being Nintendo than anything else — so if you think in those terms they're in fact very open with what they allow into their store. Also I've never known Apple to tout the idea that "we're open" or even that "we do no evil". So I think in that way they're a bit more honest.
If the decision to allow something will get us on Fox News, don't do it.
The media and political class are only allowed two positions on anything. Completely against or completely encouraging. Drugs. Infanticide etc. If you fail to condemn or block it, you're encouraging it. If you fail to encourage it, you're blocking it. Of course, when you spend less than any other industrialised country on education, you get a populous for whom everything is black and white.
That isn't without it's politics, but at least it gives a flavor how to deal with publication of different categories of material.
* Posted from my iPad...