I am contemplating using Box2d for making iphone apps, but I don't want to worry about Apple rejecting my app for using Box2d. How does box2d work?
Would Apple somehow reject for using this engine? I think I remember someone saying that they have rejected for using 3rd party dlls/etc...
Your asking a very tricky question. However there are many apps that use 3rd party game engine that are in the app store. In fact some companies are developing game engines specificly for the iphone. So I would assume if your app were rejected it would not be because you are using a 3rd party game engine.
The caveat of course is that you can never be sure. Hence why I said you are asking a very tricky question ;)
There are a lot of games that use Cocoas2D in the App Store, that also includes a physics engine. Box2D should be fine.
The main limitation around third party libraries is that you can't link dynamically - but even there you can link statically, or just include the code in your project.
The Rolando games use box2D, so I think it's safe to say Apple won't reject an app for that reason.
In general, the only restriction against outside code is that of dynamically linking in a 3rd party library. If you can include the code in your project, it should be fine.
I have two games on the app store using cocos2d, and there are a heap of other apps out there using box2D. While my apps have been rejected for other reasons, use of a 3rd party library has never been one of them.