No, the reviewers never see the scam screens. Once approved the scammers change a setting in the cloud and the app starts opening in scam mode.

If the app is working properly during review, why change it to nonworking later on?

It is like that Key and Peele skit about robbing a bank by working there.

If you can create a working app why not leave it as is ?

It was likely a very poor keyboard. Just operating well enough to pass review. Once a user saw it, no one is buying.

The more boring reason: some review employees are bad at their job

Given the up-and-down, seemingly always controversial (and sometimes adversarial nature) of how Apple performs their app reviews and enforces their rules, I think it's 50% on lazy/bad reviewers and 50% poorly-communicated rules and regulations.

I wonder if there are a load of failed submissions too. They'd want to minimise effort so I guess they'd have good ways to quickly rebranding an app as a new one.

Or the app talks to a remote server so it works normally during the review period, but after the app gets approved the author changes a flag on the server and the app changes to "scam mode".