For the record, I'm not a Google employee, so don't actually know why your 
specific application was rejected. However, I do a lot of work with the 
AdWords API, so I'm trying to get my head around the details of the TOS. I 
came across your post that suggested that the results of the 
TrafficEstimator service should be considered reporting data, and as such 
couldn't be disclosed to a third-party; this interested me because I hadn't 
considered such data to be part of the AdWords "Reporting Functionality", 
so wanted to get to the bottom of the statements you made.
I went to your site to see if it could shed some light that would validate 
your claims, and I quickly came across sitefactor and noticed it provided 
Google Ranking reports; now, if you really have a way to get accurate 
ranking data in volume without scraping the Google SERP's or using a 
service that does the same, then I think you should probably forget about 
the API application and move into providing your data in a feed because it 
would be far more profitable. 

However, most people with such data are getting it by scraping Google, 
which is against the AdWords API TOS. I suppose the specific wording just 
mentions that an API client shouldn't be doing the scraping (or interfacing 
with another tool that does), but you can see how a company like Google 
could come to the conclusion that a developer willing to violate one of 
their well known policies isn't one that should be considered a good choice 
for a partner; I certainly wouldn't....

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