The bottom line for Google is not whether the website follows their guidelines. It's whether their useers like the search results.
Tedster do you mean that google would be looking at bounce rate to rank sites ?
I've seen a massive disappearance in backlinks as Google must be discounting them, and even removing many pages from the search engine. I checked out several low quality blogs and directories I used to have links on and those pages are gone. Disappeared. If you had a link from a sub-par page, changes are that page is gone from the index, or your link just doesn't count.
Interesting thing that you say but if google is counting less links for you it is doing the same for everybody so to me the ranking would stay the same for everyone, it is percentage.
Then you say that google is taking less link and pages into account but on the other hand everyone says google has more data storage capacity than it used too , so why would they remove webpages from their index.
Ultimately, Google's aim must be to eradicate any ranking factor that can be manipulated. Sure that may take years, but... baby steps...?
If this happens this is the end of google because if you don't understand how google works ( at least part of it ) you won't ever rank anywhere and by the way remember that unless you are in the TOP 3 on the 1 st page of google you will never make a single dime on the internet.