"I am the grammarian about whom your mother warned you."
This is a great post from Carina Press on what exactly a R&R request is from an agent/publisher, and why you should be happy to get it. I know I would be over the moon to get one (and yes, I realize that means I’d actually have to submit something first…). The upshot is it is not a flat-out rejection. Far from it, if they’ve taken the time to read your manuscript AT ALL, and spend the hours that go into crafting a ‘revise and resubmit’ letter, they see a great deal of potential in something.
The revise and resubmit letter should never (ever) be viewed as a rejection. Trust me, if the editor wanted to reject your book, it would be a lot less time consuming. The R&R letter can often take hours for the editor to craft, after they’ve made extensive notes while reading your book. We don’t just whip out an R&R letter in 15 minutes and send it out. It gets crafted by the editor and then read by me and we discuss. We want to make sure that the letter is clear, lays out the issues, but also tells you why we love the book and want to see it again.
There’s something there they love. Do a happy dance! While there’s still no guarantee they’ll publish your manuscript even if you do all the requested revisions, I would consider it valuable feedback. The fact that they took that kind of time to go over it and put together a detailed critique with ideas of how to make a manuscript stronger should say a lot. If they didn’t think it really had potential, you can bet your bottom dollar they wouldn’t be wasting their own time on it.
That said, some writers will still be insulted to find out their precious darling is not quite so precious just as it is to someone else (kind of like kids and dogs… insert W.C. Fields joke…). You can obviously take it or leave it, maybe you think they’re dead wrong and don’t want to do what is suggested. That is the writer’s prerogative. But consider yourself fortunate to have gotten someone to read, really read, your manuscript.