Another possible reason for rejection is the original “Hope” image is copyrighted. (Well, there are some problems with that copyright because it appears to be a derivative work of someone else’s copyrighted photograph). Apple could get into legal problems for distributing it without permission of the original artist, even if the modifications are meant to parody the original. If I were Apple’s lawyer I would say “Reject it. It’s not worth the money for any potential fight.”
Apparently the Apple iPhone App Store has changed its mind now... :-)