Legal is the wrong word, vbut it certainly isn't what would be considered within the guidelines.
So what will Google do? Who knows?
There is a myth that Gogole does nothing. There is also a myth that they do, or indeed should do, something specific.
Google's stated approach is to combat spam programmatically. They do use (or probably do) a combination of tight keyword density filters, link weighting and gramatical checks to keep spam in check. This is all good, because human review is costly, ineffective and not solving the problem in the longer term. For you, in the short term, it may be little comfort, but then business isn't a short term proposition. In fact, there is a term for short term business stratagies: Scams.
These days, Google also don't ban sites / spam, but penalise sites out of existence. I have one client with the dreaded no PR penalty. They are in the index alright, they get regularly crawled, but try finding them. That is a brilliant, subtle way to get rid of spam, that often makes it hard to understand what has actually happenned to a site.
To bring it all back full circle, what you should do to combat such competitor tactics is not assume that:
I can never really beat my competitors unless I do some more trickery as well
And instead work hard to beat the them using strategies that will have lasting, long term effects. This includes strategies such as building more pages, getting more links and improving non-SEO aspects of your site and business, such as usability and perhaps a CRM, so that you build long term customer loyalty and repeat visits.
Spam techniques are lazy, short term solutions to the long term problem of survivng as a business. If you build for the inevitable future, when / if spammy sites get found out, you will still be there, chugging along. And if you build customer loyalty, your need for new business via search engines, and the inevitable ups and downs, wont be as telling.
Edited by projectphp, 30 March 2004 - 09:47 PM.