Is Apple Hoarding LBS Advertising?

Here's the much discussed statement from Apple to iPhone developers about location-based advertising:

The Core Location framework allows you to build applications which know where your users are and can deliver information based on their location, such as local weather, nearby restaurants, ATMs, and other location-based information.

If you build your application with features based on a user's location, make sure these features provide beneficial information. If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user's location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store.

Here's the prevailing interpretation of this directive:

"Looks like Apple is going to keep location-based advertising to themselves"

The speculation then proceeds that Quattro will be the sole provider of LBS ads to iPhone apps. I believe the above reading is incorrect. Instead I would argue that Apple is saying "don't just use location for ads alone":

make sure these features provide beneficial information. If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user's location, your app will be returned to you . . .

Here "beneficial information" is non-advertising content and services. At a time when Apple needs to court and retain developers it would alienate them (even more) to compell use of only Quattro advertising or otherwise preclude developers from serving LBS ads.