Possibly, this is sort of akin to blowing into a NES cartridge edge connector - IE the action itself is basically meaningless; that it still achieves the desired result is entirely coincidental...
There's no particular reason sweat should interfere with the pulse sensor, as although water does absorb lower frequency light more strongly than higher (which is why large bodies of water appear blue in color), a thin sheet of liquid water is not opaque to green/IR light. If it was, light from the sensor LEDs could not penetrate our skin to reach capillaries and make it back to the photodetector devices of the pulse sensor... Also, people sweat - and especially when exercising - so an exercise device which was rendered impotent by a physical response to the exercising it is supposed to monitor would be useless.
Maybe shaving any hairs on your arm under the sensor might help, as it would both improve skin contact and also reduce light blockage by said hairs; both leading to increased signal strength from the sensor...
Interesting. Strange though that Apple wasn't more thoughtful when building their APIs in the first place, making this the default way of function. *shrug*