We had a version of our app be approved by Apple with a critical login bug for anyone how had never installed the app before. Apple didn't even bother to launch the app or else they would have received the error! Now, obviously, this was our failure to catch this in QA but, seriously? Why even have a review process if you're not even going to bother logging in with the credentials we supplied?!
This actually is part of the appstore review process (I do this for my job). However, we've had apps slip through before. I'm not sure entirely why this happens, since the checks for missing entitlements or incorrect signing should be automatic, but it does on occasion.
This is a problem with Apples review process as much as anything else, since you can't test the properly signed release version of the app until you publish it to the appstore for all to see.
What would have happened had Apple rejected this app? Politically, Apple are between a rock and a hard place here. Ultimately the culpability lies with the Gmail app team and they have acknowledged this and pulled the app. https://plus.google.com/100940716892313727285/posts/4aPVQTj9...
There is an world of difference from rejecting an app for "duplicating functionality" and for bugs. If Apple rejected it and said they would take it once it was fixed, the only blowback would be from those who thought Apple was lying. No reason to cater to those folks. More likely, we wouldn't hear about it at all.
It is indicative of a larger problem I have with the App Store. I am not a fan of requiring a review process. But once you crossed that bridge, make it a damn good and tough review process. The amount of crap that gets through is amazing. You already pissed off people who don't like apps getting Apple's approval, you might as well crack skulls and make sure there is real quality in every app.
That doesn't mean Apple's QA will look for ways to make the app crash or bug out. It just means that if, during the course of regular testing it crashes, they'll stop testing and reject on the spot.