A little googling for stanza ios brought up "Farewell, Stanza. Hello, Marvin! | Emptybottle.org" which references an app called "Marvin", which sublines itself with "Your books, everywhere. Dropbox. iTunes. Web. OPDS. calibre." See http://marvinapp.com/
In general: Not all files are allowed to be downloaded to IOS via Safari (mainly because you have no real download-folder where all the crap you download lies until eternity; followed by the fact that you would need an app to view the stuff you downloaded and most relevant apps download 'their' stuff on their own; followed by the fact that apple wants you to use itunes to sync your digital goods which would put them into the appropriate places). That said: I toyed around with IOS8 and downloaded an .epub from a Webserver via Safari and now Safari asks me if I want to open the .epub in iBooks. And this works.
So, the answer to your "Does apple ban downloading of EPUBS?" question is "No".