Let me further expand on the problem here. the author says, and I quote:

"They refused to be pinned down to an exact reason, simply stating that they were doing a cull of any applications that presented widgets to the user."

And then she says she doesn't understand what she would have to take out of the app to have it re-approved.

So then, she goes on to say, and I quote:

"Our app is a beautiful photo frame with a few nice things you can put over your photos."

I take this as: you can use their app to make your iPad into a digital photo frame. Since the whole screen is taken up by the photo app, I'm sure that as a feature, the developers added the ability to add "nice things" to a layer on top of the frame, such as a clock, or speech balloons, or SOMETHING which Apple may consider the equivalent of a widget.