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This 'explanation' in fact explains nothing about the decision. The app was rejected for the fact that the user can use it to download and display perfectly legal content that Apple finds objectionable. This is, apparently, basically all that app does. Which is the same as what the Kindle app or Apple's own Safari browser do. Which are not banned.
Furthermore, the objectionable content was not in any way, shape or form contained in the app, which makes the cited reason for the rejection completely bogus. In fact, it could probably be argued, depending on how Eucalyptus works, that the objectionable content may well be less tightly bundled with the app than Amazon's Kindle ebooks, including the erotic ones, are tied to the Kindle app.
That Apple are censoring bastards is something I find personally objectionable, but that is not the heart of the problem. Which is twofold: a) the cited reason for the rejection does not match the available facts (aka Apple is, or is at least perceived to be, lying), and b) the rules about 'objectionable content' are enforced in a completely arbitrary and/or clueless manner (aka Apple is, or is at least perceived to be, being a - possibly clueless - bastard about it).
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