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You certainly got a templated response, but I don't find their refusal of your application especially outrageous.
I'm not implying anything negative about your site or traffic, just that there are several sites which are selective as to their affiliates and don't have traffic volume as the only, or even the main parameter. Some are well-known and have been around a long time, so it's safe to assume that strategy works for them.
I have no comparison in this business, but when I published books I refused to sell to book clubs. I could have filled some very big orders, but I preferred to protect my customers who owned stores. It may even have cost me money in the short term, but I wanted a stable business based on hundreds of smaller accounts, rather than be dependent on the goodwill and fortunes of a handful.
I have seen it the other way around too. Before IBM would do business with a company I once owned, I had to prove they would not account for more than 10% of my sales. Apparently this was because they wanted to be able to keep doing business with me or not, without having to be concerned (something their ethics would have required) that if they chose to terminate our relationship, my business could be too seriously damaged.
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