Also, it has nothing to do with scraping (though the whole point of the directory is to be scraped) and Google does not run its own ads on it (any ads that are stripped out are because Javascript is stripped out)..
By in large it sucks. But then again, browsing the web on a device this was meant for always sucks.
Google Mobile Search has been rewriting pages for old mobile browsers (pre-iPhone) for years. It's a similar system to Opera Mini's proxy, except rather than pre-rendered pages it outputs pages in either minimal HTML or WAP. Another way to look at it is it's like Google's text-only caches of pages. There's nothing Yahoo!-specific about it.