That was actually an interesting approach, but still doesn't seem logic. You can't actually develop a Flash app without using the iPhone OS so then you have to follow the C/C++/ObjC rule.
But if the author is counting on "not using the SDK" altogether then basically your whole developer agreement with Apple is void since the whole purpose was to develop "applications". And if the agreement is void there is no reason for Apple to accept your stuff on AppStore.
I think what he was looking for was the link between the rules Apple uses to accept/reject things from the store and the SDK agreement... but yeah, it seems to be a moot point.
But if the author is counting on "not using the SDK" altogether then basically your whole developer agreement with Apple is void since the whole purpose was to develop "applications". And if the agreement is void there is no reason for Apple to accept your stuff on AppStore.