1. G has only itself to blame for the links fiasco. If they hadn't made it such a big ranking factor there would not now be a problem.
2. Paid links are perfectly fine in some cases - you WANT to bring your business to peoples' notice. You pay to advertise in newspapers, magazines, on TV, why not on web sites and online directories? It's only G's panic over their failed links ranking algorythm that's the problem here, enticing people to pay for links way beyond reason.
3. G's adsense and adwords are paid links. I notice G does not normally ban web sites based on those paid links.
4. If G banned all web sites with more than a reasonable quantity of links to it from an unreasonable range of sites, would that solve the problem? 10,000,000 links to one small web site with a customer-visit rate of 100/day cannot be whitehat no matter how you look at it. Especially when that site has no or almost no links to any other site visible on its pages.
I am personally fed up with the number of emails that go through my mail server to my customers which try to get them to put up links to sites that have no relevance whatsoever. The companies sending those emails get blacklisted in my mail server. Oh, and virtually all of those "SEO" emails come from gmail accounts... Go figure.