IANAL, but I doubt that part of the contract would hold up in court. When looking at contracts, the court tends to favor the little guy, and I'm certain that app developers could argue that Apple was unjustly enriched by the contract. Now, I'm hardly a source of reputable knowledge, as my only experience with law is only one quarter of Business Law in college, but I could see the case going either way.
I think practical concerns would prevail here. If Apple only exercises this clause for developers who insult the King, there won't be enough plantiffs for a class action, and it would be too expensive for Joe the Developer to take Apple to court himself.
He might go to small claims court, but most will just take the loss.
