iTunes App Store is a marketing service. Try marketing applications on your own, and you will see that it is not easy. A marketing service has a reputation to keep, i.e. the things they market ought to work well. So they have every right to market apps they choose.
Imagine a population third party tools which can generate binaries for Apple’s iP****s. What if it is badly coded and has a memory leak, or usability issue like low responsiveness or high battery consumption? Would it turn iTunes App Store into a myspace of iP**** binaries, i.e. lots of junk that doesn’t function? Yes. Once the iTunes App Store is polluted with crappy apps, the iP**** empire will fall. Because there is no other easy way to install apps.
Apple is in the business of making money. If that is not the standard by which you judge companies and if you want companies to be Santa Claus, don’t expect it (think Sun) to stay in business for long before being devoured by another company. Then don’t complain why all the memory leaking, non-usable, non-responsive code you wrote is suddenly being banned the new company that devoured it.
A company ought to either make a profit or not. But not both.