I just don't see it. If I sat down today to make an app like this, and read the sentence you quoted, it wouldn't even cross my mind that I might get in trouble. What is the existing metaphor for "picture frame that shows the time, weather, and some other useful info"?
For that matter, where does it say anything about desktops?
It's about as useful as a Rorschach test, or staring at the clouds to understand the shape of Apple's intentions.
Yes, again, Apple's platform means Apple's rules - developers have little to no bargaining power. I just don't want to pretend that the rules aren't completely unpredictable at times.
Edit: I've run afoul of HIG violations before - it's usually relatively minor stuff that can be fixed and should get approved once it's resubmitted. Even "redefining a metaphor" can usually be fixed by changing to more standard controls. It doesn't sound like there's any UI change these guys can make to their app to make it acceptable.