When a WP7 app fails the Marketplace submission process, it looks like this...
We've heard that with Microsoft's new Marketplace they were going to be different than Apple. Specifically, they want to add transparency to the process so that if your app is rejected, you'll know why it was rejected and how to fix it. This may seem like an obvious way to proceed, but Apple's method is more black and white in addition to just being cryptic and arbitrary.
Developer Peter Henry, for better or worse, had his app miFlashlight rejected. We say for better because we get to see how exactly Microsoft goes about the rejection process and sure enough, after a little confusion on Henry's part, he was able to bring up a .PDF document detailing the problem. (Turns out he used Office Clipart of a flashlight for the logo thinking it was under fair-use). With a simple fix to the icon and a resubmission, Henry expects to pass on the next round.
Good luck Henry and good job Microsoft.