If this goes against his principles, then why did he start the site in the first place? It's hard for me to believe that the "only native apps" reason is what pushed it passed the line of being principle. I smell something else...
The new SDK agreement and other recent changes (like the removal of "adult" content except for select companies like Playboy) make it clear which direction Apple wants to move. Now we know their vision for the future is more centrally controlled than the present, not less.
(And as to why I started Mobile Orchard with Dan, it's because I already have other similar sites - Ruby Inside, for example - and wanted to just expand my miniature "media empire." Turns out you need passion for the topic, however, to do it right ;-) Dan had that more than I did. The funny part is now I'm the one more optimistic about the iPhone/iPad platform :-))