This latest incident allows us to revisit other incidents of non-sensical approval decisions. In the case of Tweetie, Apple backed off the potential objectionable content claim and let the update through. In the case of craigsphone, the developer re-routed potentially "adult" content to Mobile Safari. As for South Park, well, it's still not in the App Store.
With a tour in progress, the developer of the NIN app has removed what he believes to be the objectionable file, but we'll need to wait to see if this (or the ensuing outrage over this stupid decision) will change Apple's mind.
As it stands, I can't help but be flummoxed by the seemingly arbitrary nature of the App Store review process. When I reviewed NIN: Access, it was readily apparent that users had access to podcasts, remixes and music videos for the Nine Inch Nails catalog. I even thought to myself, "Well, I guess Apple got over the Craigslist-aphobia" and accepted that users who download the NIN: Access app know what they are getting into. Clearly, I was wrong.
So while apps that simulate killing an infant can actually make it into the store (and the PR nightmare is what ends up gettting it removed), apps that provide access to online content -- content that is available for sale via iTunes -- remains off-limits. Way to go!
UPDATE: The app has been approved despite the content issues, it would seem.