I think you should continue to develop and submit. Go back to the original version with the icon sharing and everything. Keep improving and submitting to the App Store as well as submitting to the jailbreak community. Ignore any rejections you get by Apple, and just submit again when you have a new version.

This sends a much clearer message to Apple: we want to and are developing for the iPhone, but you are just keeping your customers from our product. Your product will also be added to the many reasons people have to jailbreak, which can only force Apple into a more lenient position.