"Doomed! We're all doomed!"
I don't think this is quite the horror story the author makes it out to be. From the quote:
"If your app uses location-based information PRIMARILY to enable mobile advertisers..."
I've emphasised the qualifier Apple used: "Primarily". If your app's *primary* purpose in using geo-location data is to serve up ads, you're screwed. But this doesn't rule out such adverts completely. It just means Apple will have fewer ad-centric applications on their store.
Apple don't make much money from their own software; they see it merely as a means of differentiating their hardware from their competitors'. Google's business model isn't something Apple are likely to imitate: it would effectively kill the whole Apple branding and goodwill, which Apple rely on very heavily.
Apple may be control freaks, but that's because of their design philosophy, which requires complete control over the entire user experience, from hardware, through software and right down to the box their stuff comes packaged in.
But then, Apple don't *need* ad revenue: they make plenty of money from selling hardware. As their recent profit reports prove.