I think google engineers are taking a stupid view on this and it hasnt been thought through one bit.
1.Reporting of pages will end in false reports from those out to stuff other sites. It also means that some slip under the radar that sell links that havent been seen, others dont and frankly its a losing battle as the net continues to expand - its a pointless task and its their algo they need to adjust to take into account all links and accept that some links may be paid advertising ones. The more established a site is, the more likely it is to have paid advertising links.
2.A link on a page CAN be unrelated but of interest to a visitor - thats advertising. Ie a Hotel Site features a few links to a casinos, car hire, Restaurants, etc etc. All off topic but of potential interest to a visitor. Likewise a blog or forum read by 18-30 yr olds could feature text link adverts for almost any subject matter and it might be of interest. Unless google want to hand review every site on the net (and a site could change the very next day anyway)its pure guesswork.
3. A prime target for google might be say a newspaper site that sells advertising links (we see this often). Google may hit those sites but you could argue that a newspaper site is likely to be an active site that people visit hence advertising on it could get you business. Its not up to google to tell a business where it should or shouldnt advertise. The fact that a site has "Buy Blue Wigets" on a site about "Pink Elephants" should be of no interest to google. If the blue widget sites gets visitors from the pink elephant site good for them! - thats advertising.
4. A site can attract many Blog links genuinely without knowing. People post all sorts of articles, bloggers also syndicate articles and info to other bloggers about all range of sites on the net. I thought googles "page rank" was designed to take care of that ie 500 blog links on low PR1 or No PR pages was next to worthless anyway?
I think google need to revisit this - They should take it as read that many websites are likely to advertise and buy links to increase business from all over the net - Google is NOT the sole advertising media facility of the internet.
Finally, The number one problem as i see it is "Page Rank" - i think Google need to change the way they give PR weight to sites. For example they treat the page rank of a blog, .gov site and .edu site as exactly the same - when in fact a .gov site or .edu site is unlikely to give a link to a site that hasnt been reviewed or paid for.
If a site has links of this nature then you know that its content must be of some value without even looking at the site.
Meanwhile, as the net expands google will lose users confidence with ever weakening serps because they are to busy trying to look at ways of policing the internet, telling webmasters where to and where not advertise, trying to create a internet world of snitchers rather that looking at the algo and improving how it ranks a site.