I definitely think that it is wrong for Apple to not allow the app on the grounds that it is about and promotes Android, one of its competitors. However, if I worked at Apple and had the power to disapprove such an app, you bet I would.
Now the effects of this is to give some press to the magazine. If this hadn't happened, I probably would never have heard of this Android magazine app or its publisher. If anything, it's probably a brilliant marketting move, if in fact this was his plan all along. He wins because it would be news either way.
I wonder if anyone tried to put an Apple magazine app in the Android market place. I'd be interested if one were there. I'll check it later.
In any case, I don't think Google is exactly clean either. Google has been allegedly putting its own sites on Google searches ahead of other sites. I don't like the practice, but if I worked at Google and had the ability to do this, I definitely would.