Yes, I can see how you would make that simple mistake. The Handy Light application did allow tethering, which on an Android device might have meant rooting it. Other people mentioned in this thread that Apple run each binary through a scanner that looks for undocumented API calls. The Handy Light application must have been using all publicly available API calls, so it passed through their approval process.
I think Google could improve dramatically by keeping their store open, but running each binary through an automated scanner that looks for known exploit signatures. I'm not intimately familiar with the Android sandbox, but I am familiar with native assembly. Assuming that there is a public API or list of "approved/sanctioned machine instructions", it would be somewhat trivial to decompile the bytecode and check each instruction against the list and kick the application back to the developer with a list of instructions or API calls that were not allowed.