It is unlikely that power consumption has anything to do with the restriction. For one thing, you can write wasteful code just as easily in a compiled language as in an interpreted language, and I have never heard of Apple rejecting an application because it computes in a wasteful fashion.

And interpreted languages can run nearly as efficiently as compiled ones for many user-oriented tasks, because most of the time the application is in an idle state waiting for user input. This is why there is interpreted Java bytecode running on nearly every other phone.

And the phone already interprets Javascript, which is even less efficient than Flash. If Apple is willing to let the user choose whether or not to waste their cycles browsing Javascript-heavy pages, why not give them the same option to run wasteful applications?

No, this is entirely about controlling the routes of execution.