This week the company faces a full-scale revolt. The issue: Apple’s summary rejection of a program on the grounds that it duplicated a function on one of its own programs.

“Apple has gone too far,” writes Paul Kafasis for O’Reilly Digital Media. “Rejecting an application because it might compete with Apple is simply indefensible.”

“If this is truly Apple’s policy, it’s a disaster for the platform,” says Daring Fireball‘s John Gruber, one of Apple’s most influential supporters.

“I will never write another iPhone application for the App Store as currently constituted,” writes Fraser Speirs, developer of a popular iPhone app called Exposure. His post is titled “App Store: I’m Out.”

The battle lines were drawn when an Apple representative reviewing submissions for the App Store rejected a program called Podcaster. According to its developer, Alex Sokirynsky, Apple turned his program down on these grounds:

“Since Podcaster assists in the distribution of podcasts, it duplicates the functionality of the Podcast section of iTunes.” (link)

But as nearly every commentator has pointed out, Podcaster went an important step beyond Apple’s program. iTunes requires that you plug the iPhone into your computer to sync it before you can get the latest broadcasts. Podcaster, by contrast, would have let you update your podcast subscriptions directly, using the iPhone’s Wi-Fi receiver.

“I’d buy that app in a minute,” writes Speirs, echoing the opinion of most of the two dozen bloggers who by Sunday morning had weighed in on the issue.

Part of the problem is that Apple’s policy lacks consistency. The iPhone comes with many built-in functions  — a calendar, a calculator, a clock and a weather program — that are duplicated by apps the company has already approved.

Moreover, it’s not as if iPhone programmers have another option besides the App Store, a formidable market place that now carries more than 3,000 programs and has racked up more than 100 million downloads (link). Unless they release it as freeware for jailbroken iPhones, there is no other outlet for a program once it has been rejected by Apple.

“If they don’t approve it you can’t sell it,” writes Dave Winer, the developer who pioneered the RSS blog syndication system. “You can’t even give it away.”

[UPDATE: It turns out there is another way to distribute applications. As ReadWriteWeb‘s Sarah Perez explains, Sokirynsky has turned to Apple’s little-used Ad Hoc App Distribution system to make Podcaster available. You can get it here. Sokirynsky is asking for a $9.99 donation, and adds: “The program should work for a minimum of one year but since Apple can turn it off remotely, the 1 year installation is not guaranteed.”]

Speirs has called for Apple to issue some “clear and unambiguous rules” about what will and will not be accepted, and to put in place a pre-approval system so developers can get a sense of whether their idea will fly before they go out and borrow money or hire talent or put in long days and nights of coding.

“The sad thing,” writes Chuq Von Rospach, a long-time Apple systems developer, “is [that] it wouldn’t take much effort from Apple to deal with this. A little communication. Not even a LOT of communication, and they could sort most of these issues out.”

Even sadder, Von Rospach adds, “is that they don’t seem to care (or notice).” (link)

Apple (AAPL) has yet to comment on the issue.