Wilburforce - 5:35 pm on Sep 26, 2012 (gmt 0)
I don't see how Google could be influencing time on site and/or bounce rate (or even referral rates, for that matter) directly.
These effects must come from relative phrase placement. Any "choking" of referrals could only come from stopping all listings for a given phrase (all phrases?) in search results after a count of returned listings, and high bounce rate and/or low time on site must be the result of good placement for phrases the user does not find relevant (coupled with loss of position for phrases the user would find relevant).
That Google's once superb grasp of relevance has suffered through Panda, Penguin, and the other countless algorithm tweaks is not much in doubt on this thread or my own experience.
Trying to keep people on site who are not looking for your product is pointless. Trying to get people on site who ARE looking for your product is very difficult if there is a mismatch between Google's idea of relevance and the end-user's experience.