The most ridiculous App Store reject I've ever seen

I want to share with you the reject information for one of our iPhone apps that we received yesterday. While it’s a huge blow for us (and frankly the reject itself is ridiculous, to say the least), at a certain angle it might be an interesting twist 🙂
We’ve developed the application for reading e-books on the iPhone (I know, there are plenty of them) called i2Reader. Actually we’ve developed it quite some time ago, it was one of the first e-book readers for jailbroken iPhones, and a quite popular one. Finally we’ve decided to bring it to the App Store (yeah, I don’t know either what took us so long), so we’ve uploaded it to the App Store for the first time about two months ago. Since then all we are getting from Apple are rejects (about nine of them, including the famous 17+ for included webview), the last one came a couple of days ago, and boy, what a reject. Let me quote it for you:

Thank you for submitting i2Reader 3.0.1 to the App Store. We’ve reviewed i2Reader 3.0.1 and determined that we cannot post this version of your application to the App Store at this time because this category of applications is often used for the purpose of infringing third party rights. We have chosen to not publish this type of application to the App Store.
If you believe you can make the necessary modifications to bring your application in compliance with iPhone Software License Agreement, we encourage you to do so and resubmit it for review.

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Frankly speaking the logic in this reject just kills me. To paraphrase it, “the app can be used to read stolen books, so we can’t let it in the App Store”. Leaving aside the presumption of innocence, I want to ask about iTunes and iPod — shouldn’t they be banned too? After all many users indeed are using them to listen to the music that is not always legally obtained. And what exactly should we modify in the application to bring it in compliance? The only option I see is to show big alert “Don’t steal the books” on the first launch similar to what iPods have, but I’m not sure it will satisfy Apple. Actually, Im pretty sure it won’t help, and I don’t know what will.
And about that interesting twist. Could it be a confirmation that Apple plans its own e-book store and in this way kills any potential competition? After all, apps like Eucaliptus and Classic are mostly used for free “old” books, while i2Reader can be used to read books in FB2 and PDF formats. Or may be I’m just paranoid now.