While I personally think that security would be the only valid reason of ever rushing a theme (or plugin) through a review process, what mostly bothers me is this:

“We’d rather have them updating properly from our servers instead of having them create some wacky solution that updates it from theirs or from GitHub.”

What makes a custom update solution inherently "wacky"? I know he might not be a big fan of git, but I can see several reasons of bundling such a solution with a theme (or plugin). It doesn't even need to be git. And let's be frank here, GoDaddy should know a thing or two about seamless deployment, I have a hard time imagining their internal procedures being "wacky".

Also, without objecting the takedown, had the developers of Zerif used such a solution, hundreds of thousands of users would still have easy access to security updates today.