I had a Palm, once upon time. There was this non-Palm controlled web site where I could purchase software for my device. It did unbelievably well, selling many applications and making Palm owners very happy. Really, that Apple reality distortion that they are somehow better because they have an App Store that's really just a way for them to apply vendor lock-in won't survive bad press over idiotic decisions about whether or not some app gets into the store. I work in an office as well, and there certainly was a lot of people buying iPhone's and those that didn't were mostly about cost (size? really?). Now I'm seeing more and more folks not all that happy with their iPhone for other reasons, incuding this app store nonesense, who are considering switching to Android or Pre.
The problem with shaken baby was the sheer idiocy. Declining other apps that were much less offensive but accepting this one was stupid. Just as stupid was removing it, or denying other applications because someone might be offended. (BTW, customers were upset as well, which is why the media got involved.) Having a rating system is better, but you'd better be good at figuring out how to rate things. A dictionary being rated 17+ is idiocy. If you're going to control things to this degree, you'd better have very clear and reasonable guidelines that are applied. Banning a dictionary because it has the word "screw" in it is obviously stupid.
You're appologizing for Apple here makes so little sense to me. Do you honestly think any reasonable person would have applied a "no swear words" policy to a dictionary? Sure, if that's the policy, your hypothetical minimum wage grunt would be unable to OK the application, but if there were no way for that employee to bump the application up to a higher level for consideration, then Apple failed big time. And this reasoning doesn't explain how shaken baby got into the app store. You run a risk when you, for lack of a better word, censor content, but it happens all the time, for good reason, with only rare "outrage" over the censoring. So, why is Apple doing so badly?