I was going to post about this but I was going to wait until this evening before digesting all the info that's floating about.
Matt Cutts: Gadgets, Google, and SEO » How to report paid links
It seems ridiculous to blacklist paid links. How can Google determine if a link is paid for or free? They are requesting that webmasters snitch on other webmasters who may be using paid links. What's stopping me from purchasing paid links for a competitor in other to get them blacklisted?
The thinking behind this isn't very coherent at all.
If Google are to remove or diminish the power of linking of any sorts they're going to have to add a lot more weight to the other deciding factors in
SEO.
More disclosure is required.