Not exactly. Site X with text links on it is not (necessarily) less useful then a site with declared ads on it. The quality assurance issue is the effect these have on Google's ability to analyse the web. Google's way of preventing site X from doing this is by intimidating. They are not removing the site because it is so spamy that they don't want it on their search results (a case that is equivalent to HN deciding to ban a site). They are doing it because they want these sites to comply with some sort of practice. It is the publicity and threat of these penalties which are their 'raison d'etre.'

I have no problem at all with Google using whatever policies they want to make up the search results. Including kicking sites off. I do have a problem with Google threatening to do so in order to achieve some other goal.

> Which hurts Google's users as well, spam hurts us all, spam sucks. Google is correct here in removing sites which partake in such practices.

Perhaps. But it is doing so by exercising its power to shut down the internet (for that site) to enforce a standard. Google decided at some point that all paid links need to be marked in a special way. This is the standard for disclosure. They then use their power to enforce it.