Everyone knows the app Wobble. You can make "things" bounce. However, take a look at the app description. It is waaaay different then when the app was submitted. When it first came out, itthe logo was a simple bullseye, and none of the pictures were "bad". Slowly the dev started making changes to it. First, with the icon (2 bullseyes now), then the description, then with the pictures. If it was submitted in the form it was in now, surely it would be disapproved. Kudos to the dev... I think.
Yes, technically they can, but with the popularity wobble is getting, they would get bad publicity for doing that.