Oh yeah. At my previous job at a large Russian social media company, I remember our app getting rejected over this. They went to the video section, disabled safe search, and searched "porn". Lo and behold, naked people came up! And this was the reason for rejection. Like, what tf did you expect to see by doing that, cat videos?! And it's not corporate America, so our ToS did not disallow porn. From our point of view, the app is just working as intended, and no rules were broken. And the app was rated 18+ anyway.
And then "illegal file sharing". On a strange coincidence, they started enforcing that one relentlessly just as Apple Music was preparing to launch. Yes, you could upload, search, and stream mp3s on our service without any regard to this dumb thing called "copyright". No, it's none of Apple's business to be policing any of this.
IMO, at this point, the only way out of this is for Apple to be forced by law to allow sideloading apps on iOS.
edit: I now vaguely remember that at some point we created special limited accounts for iOS reviewers. This somewhat eased the pain, but they would sometimes sign up for their own accounts too and see things they weren't meant to see. I didn't participate in any of this first-hand because I was working on the Android app.