I wouldn't quite call it the norm, but it is certainly not unheard of in the smallsat industry. Fortunately this story is still an outlier in that they received a rejection first, but it wouldn't be bad to have a discussion on why companies are launching while still awaiting approval and see what, if anything, can change.
Anecdotally, what makes this particularly difficult for the companies involved is that they are generally secondary payloads without any say into when a launch goes, with requirements on delivery sometimes months in advance of a launch, and with launch dates that regularly slip months to years. For many companies, this gives them a highly uncertain date by which they actually need the approval, and the process isn't known as a reliably paced one. Sometimes your approval might be sitting in a queue and get bumped by SpaceX applying for licenses for their constellation, for instance.