From what I understand, the roots of RWA's various forms of recognition of publishers go back decades to concerns that predatory publishers (comparable to the most reviled publishers in the Bewares section here) were using RWA and its conferences to find authors, who were then duped into thinking the publisher was legit, b/c, after all, the author had met the publisher at an RWA-sponsored conference, and the publisher had even been sponsored, in a sense, by RWA (which comped their fees, provided space, etc.) So, RWA needed to establish some sort of rules for the publishers who would receive their support at conferences and in other forms of recognition by the organization.
There can -- and is -- a lot of disagreement about whether the distinctions RWA makes today are appropriate, but I think there is general agreement that RWA (using its members' dues) should not be spending money to enable predatory publishers to prey on its members. Ergo, the one clear line is that a vanity publisher's presence at a conference will not be supported by RWA monies.
It's tricky when one company has both a vanity and non-vanity division. If they're clearly distinguishable, it might be possible to make that distinction and endorse one and not the other. But here, there's no clear distinction, b/c of the branding (which Harlequin denies will be presented to readers, but it will be presented to authors, who are RWA's constituency). If Harlequin has a division that is not clearly distinguished from the non-vanity divisions (at the author-pitch level), then there's a serious risk that if RWA underwrites Harlequin's presence at the conference, then RWA is facilitating Harlequin Horizons' pitching to RWA members. And that's something that, I believe, no professionally-minded romance author (the definition of RWA's membership) wants.
This is a difficult situation for everyone. It can't be easy for the RWA board members. It's obviously upsetting (something of an understatement) to existing Harlequin authors (and my head hurts just thinking of the grief that will come from people trying to distinguish the "real" Harlequin authors from the vanity Harlequin authors). I really wouldn't want to be one of the employees of Harlequin who didn't create this mess, but are facing the flak (primarily the editors in the trenches, dealing with authors directly). Even the folks who had this not-so-bright idea are in a tough spot, because they've undoubtedly locked themselves into an untenable legal/contractual position.
It's a mess. And I'm so very sorry that some really wonderful, creative people are being hurt by the mess.
JD