We had this issue and went back and forth with Google for weeks with no progress. It was infuriating, since the peeps on the other end just cut and pasted responses. Then, we hashed the Contacts before uploading them and our app was immediately approved. Subsequently, they decided to ding us on this permission "QUERY_ALL_PACKAGES", which we needed for inviting people you know to our app. Since we were so beaten down,…
I don't want you to query my packages and I don't want your help to invite people I know to your app. That sounds like a feature that was made for your benefit, not for mine. So it seems that Google made your app better for me as a user. Congrats Google indeed.
If you don't want to use that feature, don't press the "invite friends" button and that code will likely never run. If you don't want the app to even theoretically have access to your app list, don't give it the permission. Is it not a runtime permission? That sounds like Google's fault, not the app's.