I could see Apple doing the Wrong Thing with this very easily, but in this case, I have to agree with him.

This developer was violating copyright for the purpose of selling useless junk to users. Unlike some high-profile rejections, it's very clear in the written agreement that violating copyright is not allowed. It also doesn't appear that there was anything accidental about these violations; the developer understood exactly what we was doing, and no reasonable person would have thought it to be legitimate.