@Anonymous Coward
"As far as I'm aware, it's because Apple's policy on iPhone apps prohibits offering products that can run arbitrary code, even if that arbitrary code is running on something as limited as a virtual C64."
Actually, not true. There are several other games in the AppStore that run inside an interpreter, such as a few Sega games.
The reason for this app to be rejected the first time however, if i remember correctly, was that the app allowed executable code (the games) to be downloaded and run (inside the interpreter/emulator) outside of the appstore.
This basically bypasses the appstore. In this case it would probably only be used for games, but if this business model was allowed by Apple, it would allow one to write a framework with its own downloadable utilities, bypassing the AppStore's business model entirely.
And also Apple could not guarantee the performance and/or security issues if downloadable executable code would be allowed without their approval.
Of course, you can take this any way you want (personally i *think* the businessmodel-implications would weigh heavier than the performance issue). But it's Apple's ballpark.