dustin999 - I will say that when I read your second paragraph, I first read it the way Marvin did, as one more 'Google is broken' comment. One needs to tie both sentences together to read it as a statement about a potential Google weakness, where a competitor might be able to hurt you.
In that regard, I know of some cases in the past where competitors have hurt sites by sending them some spammy links. Thin content (and/or an overall weak backlink profile) will make a site more vulnerable to that kind of mischief.
It could be that your site was marginal to begin with, perhaps marginal enough that in a manual review Google decided not to give you the benefit of the doubt.