Rota is not around anymore, so we can't go and ask him what he meant. My guess is that he is referring to the $\lambda$-ring structure of symmetric functions which is related to plethysm and the composition of Schur functors (that's the representation theory connection as well as the category theoretic one regarding polynomial functors). This $\lambda$-ring structure plays a role in $K$-theory as explained, e.g., in the book "Riemann-Roch Algebra" by Fulton and Lang. A nice (and probably more accessible) pedagogical reference is this set of notes by Darij Grinberg.
Abdelmalek Abdesselam
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