Will Apple reject a newly submitted iPhone app that does not support the iPhone 5's screen dimensions, ie runs in compatibility mode and is built to the iPhone 4's screen dimensions?
No, its not necessary. You will notice during submission to http://itunesconnect.apple.com/
Screen shots of iPhone 5 (4 inch retina ) are optional.
UPDATE:
Now 4 inch retina screenshots are necessary to submit iPhone application on Apple AppStore. Means now you have to support iPhone 5 in every new app you submit to apple store, event when you submit a new version to existing application.
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