(Legit sidenote: Google has, via the use of Analytics data, a mass coverage of clickstream for the whole web, which are default opt-in, follows you everywhere, and can identify you uniquely. The Bing Toolbar at least asks first.)
If this is the case, Google isn't being picked upon; rather, they are merely the first, who figured this out externally. Cookie for the scientific rigor, but no cigar for the way they PRd the story. Correlation, after all, does not equal causation.
Google does not use Google Analytics data in any way in our rankings. I've said that plenty of times before, but it's worth mentioning.
As a webmaster I would opt-in for this sort of thing in a heartbeat if I thought it would help your algorithms understand my site. I'm sure Joel Spolsky and most other legitimate online publishers would do so too.
Search engines to me are an obvious case of a means to an end. If a search engine better than Google were to come out tomorrow I would switch to it (from Google) instantly with no regrets. Google's sense of propriety about their results (or, more accurately, what users clicked on after searching via Google), especially given the fact that they are well-known for their penchant for sucking in user data like a black hole (not that I care-- I want them to use it if it means better searches), to me seems 9 parts hypocritical and 1 part prima donna.
Need people be reminded that this is the same company that "accidentally" logged users' WiFi browsing habits while driving StreetView cars around Europe? Give me a break. Everyone is guilty, and no one is going to do anything differently now than they did before.
Why does the user's click from the results page suddenly belong to Google (apart from the fact that in this specific case they actually artificially created a fake long-tail result)? If I Google Bing, and then Bing's ranking of Bing goes up a a result (not that it's not already #1, but whatever), can you actually say that it's Google's result and ranking? What if it's nytimes, or any number of extraordinarily common searches where you're really just doing a domain lookup for a name you already know?
What if I didn't click on anything until the 30th page of results because that was the only useful result, and it causes the Bing rank to go higher? Does Google have any ownership over the rank then, even if the useful page was ranked lower than much more useful results? Couldn't Google then just return a list of every page on the internet in response to every query and then claim that their results are being stolen?
To be honest, I'm not really convinced that either side is in the right here. I just think that it should be made clear that there is a large distinction between stealing results and tracking clickthrough behavior. One would be laughably shortsided and of dubious ethics, the other is basically common practice, and is being made a bit more than it is because of its superficial appearance.
They use results for terms users entered to Google to crawl pages that are not in their index (torsorophy example which is not an artificial one) therefore enriching their index based on google's results, incresing their depth.
As for ranking, it is more blurry, but When you record users clicks, which directly correlates with ranking, it starts stinking.
Even considering the top 100 most visited websites on Alexa: all of them has a search form, and only 20 or so belongs to Google; it's very easy to see how the aggregated usage of the other 80 could be much, much higher, than the aggregated usage of Google properties.
Therefore, while Google might be single most impacted organization in the world, most of the data comes from non-google properties. And none of this has anything to do with my original argument of the algorithm itself being benign.
I'd also guess that the data from domain specific sites are more valuable than generic search sites. (User selects appropriate site, does search, selects appropriate result.)