In the publishing world an author provides exclusivity in exchange to something. Usually the author gets some type of advance and the commitment from the publisher to publish and market the book.

Here you are supposed to give up commercial exclusivity merely for the ability to use a piece of software. And there really isn't anything special or expensive about that software either, there are plenty of free ebook creation software options.

Furthermore, in the usual publishing contract if the publisher that has exclusivity declines to publish something, the author can usually shop the work to other publishers. Not here. Here apparently if Apple says no, you are pretty much screwed, you cannot sell your work anywhere.

And by the way, I do not think that the original article authors are misreading anything. The agreement says:

"Apple may determine for any reason and in its sole discretion not to select your Work for distribution"

This means they can refuse distribution for any reason, and you do not need to do anything wrong to be refused. And of course if they refuse you do not have the right to sell your work anywhere else.