From my perspective, most of the PR damage is because a lot of other smaller developers have come out of the woodwork to voice their grievances with Apple. These kind of things happen all the time, and a lot of us feel stood on by the giant Apple. Even though this event sounds like a special case, it still highlights the draconian behavior we deal with. (That's what I would call Apple trying to get him to post a blog post with a "statement" about how wrong he was...) I have never felt so small as when dealing with Apple and the app store.
But have they, though? I've read about this topic extensively and I've actually yet to run into a single comment or blog post about someone with a very similar experience and was entirely innocent. All I hear is the same banter that Apple does this to the little guy and everyone in solitary agreement with this notion. Very few people are willing to actually willing to put their pitchforks down and humbly admit that maybe Apple was accurate in its assessments of this developer and did more than they probably should have to rectify things.