From what they told me, it's a "three strikes" policy, very much like what the original poster said: they warn you once, very vaguely, that your software infringes a section of their policies.

If you try a second time, they refer to some subsection of the policies (still pretty vague, but pointing in that direction).

And if by the third time you don't clean up your act, suspension.

It would be nice if they said "you're using copyrighted material" or something to the effect, but that's Google for you :( . It actually seems in the poster's case they were a bit more specific.

There are still plenty of apps using copyrighted material out there, I guess it depends on the copyright holder and/or their lawyers.

Edit: that (alleged) three strikes policy is per account, not per app, so if he had 2 previous rejections, and only one for that app, they're unforgiving.