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After all, if every top ranked site you found had lots of 404 errors on it, you would probably blame Google for it, yes? :)
I know some people would - so, it's in Google's best interest to present the most usable & high quality sites at the top for a query that matches the content.
Of course, I have no proof that Google would do this, but some of the research papers published by their staff lead me to believe that they *do this* in fact.