And if he hadn't done the "wrong thing" and the "very wrong thing", you'd be the first to say "non-issue, wouldn't get through the App submission process". For iOS, the submission process itself is part of the security measures. If your proof of concept can't make it into the app store or be exploited on live devices, then you haven't found much of a security flaw.
He had to push this through to prove to people that it could be done. Otherwise, the people here, like yourself, that simply flame his efforts would be saying how he found nothing, some theoretical bug that would never be exploited in the wild.
You're right that the approval process is part of the security of the device. But the mere fact that past apps have snuck in "Easter Eggs" is already proof that the process is not perfect. So nobody should believe the process is perfect when we know some apps did video streaming over 3G before AT&T allowed it on their network as well as other fun things that caused their apps to be pulled after being approved.
Another route that Charlie Miller could have gone was to contact Eddy Cue about planting some "bad apps" in the approval process in order to internally test Apple's own approval process and the engineers doing the work. Cue or a manager reporting to him could have it setup so the apps would never go public by having a "final veto" in place would trigger an email to the approver telling them that they just got tricked into approving a bad app. This whole process could be handled internally without tricking Apple into exposing its customers to malware. When you start calling out instances of "bad apps" that got approved at quarterly meetings, you don't want to be one of the folks who did that.
Miller and Cue could have even setup a channel by which hackers could submit "bad apps" under fictional developer accounts to test the app store process. Any app received through this method would simply be a test to see if the approvers are savvy enough to catch things and then you can train them on how to catch them.
Nobody should have believed the App Store approval process was perfect given the past slips, but exposing somebody's customers to malware so that now they have to go contact those customers and tell them they may have been compromised is unwise.
Remember folks : People on MacRumors know crap about security flaws, their scope or the way we need to react to them. People on this forum (and I'll get downvoted here by them) *cheered* when the guy behind jailbreakme.com exploited the PDF bug in Safari to run arbitrary code on their devices without their intervention, simply through visiting a web page. These same people *booed* when Apple fixed that bug.
A bug that could have had disastrous effects on their personal data and device. This is the sort of crowd that is now insulting Charlie Miller. Sorry if I don't lend any credibility to the folks here on subject matters that relate to computing and security (not to generalize, some of the people here actually understand the issues, they just get drowned out by the masses who are completely ignorant on the subject and just want to put in their 2 cents to defend Apple).
Keep in mind that the guy who exposed the PDF bug also provided a fix with it. Right after you used the jailbreak you could patch your phone and close the door behind you. Those who jail broke their phones loved this. Also, his Web page was very clear that it was going to exploit a bug on your device to jailbreak. No secrets.
Charlie Miller just duped potentially many Apple users into downloading what they believed to be a stock ticker application. Those users currently don't know if he decided to take a copy of their personal data or not. They don't know if he decided to browse their photo libraries to check for inappropriate pictures of their girlfriends or wives. They don't know if he checked to see what kind of movies they like to watch. They don't know if he read their personal emails. They don't know if he downloaded their password value database and is now attempting to decrypt it. These users have been duped and they are probably very angry about it. This is a very different mode of operation than saying "click here to allow me to exploit a bug on your phone to do something".
The only way for Apple to save face with these customers who just got duped is to take swift action against Charlie Miller. They may even bring federal charges against him.
There were better ways for Charlie to go about this. I like Charlie and I think his efforts are great. But kicking him out of the dev program is not going to have any ill effects. He will still hack Apple devices to try to embarrass Apple, and this is what he did anyway. I'm glad Charlie Miller found this bug. I feel bad for users who downloaded his app and are now nervous about having potentially been compromised. I don't think a federal seizure of his computer and hard drives would be far-fetched in order to determine if he used the exploit against customers of the app. He crossed a line when he duped customers who bought the app. The app's description did not read "this is a fake stock ticker app that demonstrates an exploit in iOS", instead it
read:
Get real time stock updates with this app. Configure the app with the stocks you want to follow and watch their values change in real time. Red and green flashes occur over the stocks as their value rises or falls.
I wish Charlie had taken an alternate course in getting this exposed. I wish Apple had offered him a job under Eddy Cue to head up a "plant bad apps" project to discover how savvy the reviewers are. I sure hope Apple is re-reviewing past apps right now for this exploit and taking measures to fix this in iOS 5.0.1.