I have to agree with BlueFin's criticism of this quotation. In the short term it makes sense to just disqualify any site with offending clicks because it is too much hassle in comparison to revenue, but in the longterm this is a system killer. As BlueFin mentions, there is a lot of vengeful activity on the web.
Why do societies set up small claims courts. They are a complete waste of money and other resources. Possibly hundreds of dollars are used to settle fifty dollar claims. It's because without them people would know that they could rip people off on a small scale and never have to worry about it. Likewise here. Google should waste the resources to filter fraudulent clicks, not for the benefit of the site in question, but to maintain order in general.
Of coure, having said that, we don't ever really know why people's sites are given the boot. And so the 'offending' sites may or may not be the actual offenders. Do you take the word of someone who posts a complaint on message board without any degree of skepticism?
Personally, I love Adsense and I am at the same time constantly nervous about getting the boot. And as a result, I am extra careful to follow the TOS. Hmm. Maybe public executions do work as other people have mentioned on this forum?