Did You Know That Google is Realy Crossing the Line with Knol?

I did say in the past that I like the way Google does business. Some people argue that they are trying to dominate the web. Well, as long as they try to do this with transparency and ethics that is not much you can condemn. Google is a publicly traded company inside a capitalism environment after all – its objective is to maximize the value for the share and stake holders. If there is a business where they think they can make a profit, they will enter it.
Now while I am willing to sing them praises when deserved, I also think that we should be vocal when they cross the line. If you paid attention to the launch of their expertise sharing website Knol, you probably saw a great deal of controversy coming together.
Knol is basically a Wikipedia clone, with some different features. One contributor, for example, can write several articles on the same topic (Squidoo style).
The main problem with this initiative, as many people have highlighted, is that fact that Google apparently is entering into the content business, creating a huge conflict of interest.
In the past Google executives have clearly stated to the web community that they would never enter into the content business. That was a required reassurance, else they would start competing directly with their partners (i.e. websites that appear on Google’s index, and websites that are part of the AdSense network).
Looks like they forgot about that reassurance.
Here is an example of how Knol could compete with About.com (property of the New York Times):

1. About.com authors and contributors decide to give Knol a shot, and start putting their articles there
2. Google gives high trust to Knol articles, and starts ranking them high on the search results
3. The Knol articles of those authors and contributes start getting good traffic
4. The authors and contributors put AdSense on the their Knol page (Google already allows that)
5. Authors and contributors start making good money, and decide to write more on Knol and leave About.com
6. The cycle repeats and reinforces itself, Knol starts to spread through the search results, and Adsense income soars
7. The New York Times gets pissed off, but there is nothing much it can do about it

Now keep in mind that this example applies to any content publisher. Even bloggers. Suppose you blog about pink mobile phones, and you have the first result for that keyword on Google. Then someones decides to create a Knol page about pink mobile phones, and Google starts ranking that Knol page higher than yours (just because its their platform). Your search traffic would go down the drain (and possibly your money too, if you were monetizing the website).
Looks like a fantasy scenario, but it is not that much of a stretch. Danny Sullivan from Search Engine Land has been conduction some tests with Knol pages, and the results are surprising. 30% of all the Knol pages that he created for test pages were ranking on the first page of Google’s results after one day.
Aaron Wall also proved that with some backlinks involved a Knol page that duplicates a page of an existing web page will outrank the original.
I am not sure about you, but I don’t feel comfortable with that at all.
So what is your opinion, is Google trying to enter the content business with Knol? If so, do you think this is OK, or do you think they are crossing a line and should think better before going forward?