From a list discussion of rejections/submissions: Author Barbara Kingsolver handles rejection by not considering her project rejected. Instead, she visualizes that she's addressed it 'To the editor who can appreciate my work,' and it has simply come back stamped 'Not at this address.' You have to keep looking for the right address.
Actually, she's got a good head on her shoulders, in my opinion. I keep telling people that things aren't actually "rejected." Rejected has several connotations, but one of the more notable ones is "To discard as defective or useless; throw away." Since I know my work is not defective or useless, I choose not to think of it as a rejection.
It can be a refusal. That would mean ONLY either an unwillingness to do something or "To decline to jump (an obstacle)." That is appropriate. They are declining to jump into production of the book, because they are uncertain of the end result or leery of the conditions of said jump. I can take that.
They can decline. That would mean "To refuse politely." They can refuse politely. Read again what refuse means.
They can pass on it. The most common definition of pass, in this context, is: "To allow to go by or elapse." Think about that one. It means that they stand aside and let the story go on to somewhere else. That's a positive note.
NEVER focus on rejection, IMO. Instead, focus on the fact that they declined/refused and have taken a pass to allow someone better suited to take the project on.