Publisher Manomio thought it was on to a good thing; cashing in on all those iPhone users still desperate to hear the congratulatory speech at the end of Impossible Mission, but despite apparently having the vocal support of Apple Europe, the completed application fell foul of the iTunes rules and won't be available.
Boo Hoo. I'm registered in the dev program for iPod Touch/iPhone and the first thing I did was read the license. No doubt they did too. No whining when violate terms you willfully agreed to.
Apple probably doesn't want to risk liability from hosting rom warez on iTunes, but I'd guess the main reason for the no VM clause is to prevent folks from completely subverting the app store.