Microsoft appears to be reconsidering a decision to bar an application from the Windows Phone 7 market, in one of the first tests of the software giant's mobile app approval process.

The developer of an application called Imagewind reported that after Microsoft approved the app in mid-March, the company this week asked him to make onerous changes or pull the application from the market.

Imagewind displays in real time images that people post on Twitter using tools like Twitpic.

After submitting an update to the application, Roger Peters, the developer, received a note from Microsoft this week asking him to filter the content. "While the images shown are dynamic, per your app's disclaimer, a portion of the images' content is too graphic for the app to be permissible in Marketplace. In order to be permissible, there would need to be a content filter before surfacing images since users are not querying a specific type of image and are rather pushed to them," according to the note signed by the Windows Phone Marketplace Policy team.

"Given this, we ask that you unpublish your app within one business day until you are able to modify your application to comply with the certification guidelines," the note said.

Filtering the images isn't possible, Peters said. "Since Imagewind is entirely based on live unfiltered images from Twitter, there is no chance of me ever being able to comply with the policy team's request short of hiring a team to monitor and filter images 24/7. This rejection draws the line in the sand for what is and isn't allowed on Windows Phone, and it paints a distinct difference between what is allowed in the iPhone app store and the WP7 marketplace," he wrote in a blog post about the matter on Wednesday.

However, it now appears that Microsoft may be reconsidering its decision. After hearing about the incident, Brandon Watson, who is responsible for the developer experience on WP7 at Microsoft, said via Twitter that he is talking to the Marketplace team about the decision.

On Thursday, Peters wrote also via Twitter that he'd heard from the WP7 marketplace policy team that it had extended his grace period while it reviews the situation with Watson. The app is currently still available in the Marketplace.

The incident points to the challenges mobile platform providers face when deciding how to best manage applications. Google is on one end of the spectrum, allowing any application in its store but reserving the right to later remove apps that violate its policies. That strategy has come under criticism because, as recently occurred, it can allow harmful apps in the store. Google recently reportedly pulled around 50 apps that were found to contain malware.

Apple has been perceived to be on the opposite end of the spectrum, scrutinizing each app and rejecting some for what some developers have characterized as arbitrary or overly strict reasons.

However, judging from the online discussion about Imagewind, some people feel Microsoft will have gone too far if it does force the removal of Imagewind. Peters and others say that a similar app would likely be approved in the iPhone App Store if it presented a warning that users must be over 17 years old. He said that WP7 doesn't have the option to present such a warning.

Peters wrote that he's slightly annoyed that the app wasn't rejected initially because he has since potentially wasted time improving it. But he's hopeful that he might be able to come up with an agreement with Microsoft that will allow the application.

"Obviously there is still room for the Windows Phone marketplace to improve, and maybe this can be one place to push for some changes," he wrote.