No, it just means that instead of Chrome for Android and Chrome for iOS having different versions of WebKit, Chrome for Android will use Blink and Chrome for iOS will use the system WebKit, as it does now.
It was this reason that Adobe could never launch a flash enabled browser on iOS.
Or something like that. Something about security concerns.
We'll be coming at the same problems from different angles, find and fix different bugs, and have the opportunity to peek at how other browsers have done things. I'm quite hopeful that will mean that we'll all end up with better implementations.
And no, Apple does not allow other rendering engines so much. Specifically, they do not allow anything that can execute code that is not distributed with the app. So for example, no JS engine that's allowed to run scripts that don't ship with the app, period (even without a JIT).