Updated September 18:
Microsoft has offered some clarification on this issue:
In the vast majority of instances where an application is removed from Windows Marketplace for Mobile, users of this application will continue to be able to use these applications on their phones. In the rare event an application from Marketplace exhibits harmful behavior or has unforeseen effects, Marketplace has the capability to remotely uninstall these applications. While we hope to avoid this scenario, we will make refunds available in such cases.
As part of their upcoming launch of Marketplace for Mobile, Microsoft will be including a kill switch. However, unlike Apple, who has a similar tool for their App Store, Microsoft is removing the application from the phone if the application becomes unapproved in the Market.
|– If an application is approved but later removed from the marketplace it will then be automatically removed from all mobile devices.
In the past, any application downloaded to a Windows Mobile phone would continue to be there, regardless of the application. It was possible for the creator to kill the application if they so chose, but it was common knowledge that the user who downloaded that application still had the rights to use it.
While any user or developer who goes through Marketplace will agree to such a feature when they accept the EULA, this will create some serious questions when a paid-for app is wiped clean. Will a user who paid for an app receive a refund if their application is wiped clean? Will the developer or Microsoft be responsible for the refund?