This pretty much is aimed directly at Adobe's upcoming Flash CS5, which claims to produce "iPhone apps". The trouble is, those Flash iPhone apps are gigantic bloated slow things, because they pack an entire Flash runtime into every app. They make the iPhone look bad, and if they're allowed, there'll be a flood of crappy bloatware from Flashmonkeys.
There is a way out for Adobe. If they make Flash CS5 produce WebKit-optimized HTML5, using Canvas and video tags, then Flashmonkeys can publish their "apps" to the web, and they'll run just fine on the iPhone and iPad. They can't be sold in the App Store, but they can be distributed the same way as modern Flash apps, and monetized with ads or placement on sites like Kongregate.
Of course, this is like making Adobe put a bullet in the head of their own Flash plugin, because who needs Flash if you have HTML5, but that makes everyone except Adobe happy, too.