It´s always sad to see censoring, but I think Apple might do this to avoid legal problems, rather than just being arrogant. They sell Ipods worldwide, and depending on the country you can get sued for all sorts of things. Some places might regard an Ipod with "adult" messages as something similar to porn, and have laws to prevent, for example, its sale to minors. And what about engravings that target specific persons or organisations, who could see these Ipods as libel/slander? Or how about racist or certain political messages - I live in Germany, and here you could get into serious legal troubles for messages that promote fascism.
As Apple both makes/sells the Ipods and does the engraving, I suppose they can be seen as responsible for the message-bearing product as a whole, and might thus not get away with "the customer is to blame, we were just following orders".
Is there a way to find out if a message won´t be engraved before ordering? I would like to see if I can get away with a Nano rebranded to "SONY".
Björn