scraping content is allowed under fair use, but going the extra step of nofollowing is an intentional attempt to use someone else's content without passing pagerank.
it is a deliberate attempt to outrank the sources. this is pretty much akin to a mid-level manager taking credit for the work performed by one of the people that reports to him. illegal? no. lame and worthy of being called out for? yes.
i also agree with you that the real onus is on google to not rank sites that engage in this tactic.