I've had similar things happen to me (not quite this egregious, but still pretty bad). I haven't been shipping updates for some of my existing apps because Apple won't let me keep existing functionality.
Considering doing Android ports, but there's not (yet) enough money in it, and the software stack is quite a bit crappier IMHO.
I find it interesting that Apple's problems with the review process seems to be hurting them the most by leaving developers hanging and having nothing better to do than port their apps to another platform.
I haven't been shipping updates for some of my existing apps because Apple won't let me keep existing functionality.
This happened to a product I was working with, as well (albeit with trivial functionality we had no trouble taking out). The logic is extremely silly, indeed.
Considering doing Android ports, but there's not (yet) enough money in it, and the software stack is quite a bit crappier IMHO.