Yup I had that on SX too... same story - accepted everywhere else (and is quite a good seller). I understand why they want to be on a safe side - like "hmm I don't know if this identifiable or not, who knows, but to avoid even remote possibility for the lawsuit it's better to reject it... we have lots of other stuff to sell". With current practices especially in US where all this ridiculous lawsuits are happening all the time I'd probably do the same if I was the owner of the agency.
Not that I don't think it's a ridiculous nonsense. Next they will require releases for the clothes that models are wearing from the manufacturer. I mean, the pattern on the sweater or the hat can be identifiable right?

Hmm, shouldn't have said that, don't want to give them ideas...
About street shots being "easy way" - can't agree. For the shot that I am talking about, had to spend an hour on the corner of the street waiting for the right light and right people to show up (let's post LO again cause I like Bryan:)):
http://www.luckyoliver.com/photo/4940814/business_peopleThis image has unmistakable "street feeling', something you can't really recreate with models. Not this kind of dynamics.
Now, can you even tell which city this was taken in? Now or 10 years ago? Can you really say for sure if it was you - yes this is me without a doubt?
I don't think so... But like I said before they are just being too cautious. Why not accept them as editorials tho?